Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Regarding Dedicated Cores, 22329-22334 [2025-09388]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 90, Number 100 (Tuesday, May 27, 2025)]
[Notices]
[Pages 22329-22334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-09388]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-103073; File No. SR-CboeBYX-2025-010]


Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule Regarding Dedicated Cores

May 20, 2025.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 7, 2025, Cboe BYX Exchange, Inc. (``Exchange'' or ``BYX'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its fee schedule to adopt fees for 
Dedicated

[[Page 22330]]

Cores. The text of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/BYX/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule to adopt fees for 
Dedicated Cores.\3\
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    \3\ The Exchange initially adopted pricing for Dedicated Cores 
on May 6, 2024 (SR-CboeBYX-2024-014). On July 1, 2024, the Exchange 
withdrew that filing and submitted SR-CboeBYX-2024-024. On August 1, 
2024, the Exchange withdrew that filing and submitted SR-CboeBYX-
2024-028. On business date September 30, 2024, the Exchange withdrew 
that filing and submitted SR-CboeBYX-2024-036. On November 26, 2024, 
the Exchange withdrew that filing and submitted SR-CboeBYX-2024-043 
and subsequently withdrew that filing and submitted SR-CboeBYX-2024-
044. On November 27, 2024, the Exchange withdraw that filing and 
submitted SR-CboeBYX-2024-045. On December 4, 2024, the Exchange 
withdrew that filing and submitted SR-CboeBYX-2024-047. On January 
24, 2025, the Exchange withdrew that filing and submitted SR-
CboeBYX-2025-001. On March 13, 2025, the Exchange withdrew that 
filing and submitted SR-CboeBYX-2025-005. On May 7, 2025, the 
Exchange withdrew that filing and submitted this filing.
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    By way of background, the Exchange recently began to allow Users 
\4\ to assign a Single Binary Order Entry (``BOE'') logical order entry 
port \5\ to a single dedicated Central Processing Unit (CPU Core) 
(``Dedicated Core''). Historically, CPU Cores had been shared by 
logical order entry ports (i.e., multiple logical ports from multiple 
firms may connect to a single CPU Core). Use of Dedicated Cores 
however, can provide reduced latency, enhanced throughput, and improved 
performance since a firm using a Dedicated Core is utilizing the full 
processing power of a CPU Core instead of sharing that power with other 
firms. This offering is completely voluntary and is available to all 
Users that wish to purchase Dedicated Cores. Users may utilize BOE 
logical order entry ports on shared CPU Cores, either in lieu of, or in 
addition to, their use of Dedicated Core(s). As such, Users are able to 
operate across a mix of shared and dedicated CPU Cores which the 
Exchange believes provides additional risk and capacity management. 
Further, Dedicated Cores are not required nor necessary to participate 
on the Exchange and as such Users may opt not to use Dedicated Cores at 
all.
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    \4\ A User may be either a Member or Sponsored Participant. The 
term ``Member'' shall mean any registered broker or dealer that has 
been admitted to membership in the Exchange, limited liability 
company or other organization which is a registered broker or dealer 
pursuant to Section 15 of the Act, and which has been approved by 
the Exchange. A Sponsored Participant may be a Member or non-Member 
of the Exchange whose direct electronic access to the Exchange is 
authorized by a Sponsoring Member subject to certain conditions. See 
Exchange Rule 11.3.
    \5\ Users may currently connect to the Exchange using a logical 
port available through an application programming interface 
(``API''), such as the Binary Order Entry (``BOE'') protocol. A BOE 
logical order entry port is used for order entry.
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    The Exchange proposes to assess the following monthly fees for 
Users that wish to use Dedicated Cores and adopt a maximum limit. 
First, the Exchange proposes to provide up to two Dedicated Cores to 
all Users who wish to use Dedicated Cores, at no additional cost. In 
the event that a User voluntarily chooses to use more than two 
Dedicated Cores, only then would the Exchange assess the following 
fees: $650 per Dedicated Core for 3-10 Dedicated Cores; $850 per 
Dedicated Core for 11-15 Dedicated Cores; and $1,050 per Dedicated Core 
for 16 or more Dedicated Cores. The proposed fees are progressive and 
the Exchange proposes to include the following example in the Fees 
Schedule to provide clarity as to how the fees will be applied. 
Particularly, the Exchange will provide the following example: if a 
User were to purchase 11 Dedicated Cores, it will be charged a total of 
$6,050 per month ($0 * 2) + ($650 * 8) + ($850 * 1). The Exchange also 
proposes to make clear in the Fees Schedule that the monthly fees are 
assessed and applied in their entirety and are not prorated. The 
Exchange notes the current standard fees assessed for BOE Logical 
Ports, whether used with Dedicated or shared CPU cores, will remain 
applicable and unchanged.\6\
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    \6\ The Exchange currently assesses $550 per port per month. 
Port fees will also continue to be assessed on the first two 
Dedicated Cores that Users receive at no additional cost. See Cboe 
BYX Equities Fee Schedule.
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    Since the Exchange currently has a finite amount of physical space 
in its data centers in which its servers (and therefore corresponding 
CPU Cores) are located, the Exchange also proposes to prescribe a 
maximum limit on the number of Dedicated Cores that Users may purchase 
each month. The purpose of establishing these limits is to manage the 
allotment of Dedicated Cores in a fair manner and to prevent the 
Exchange from being required to expend large amounts of limited 
resources in order to provide an unlimited number of Dedicated Cores. 
The Exchange previously established a limit for Members of a maximum 
number of 60 Dedicated Cores and Sponsoring Members a limit of a 
maximum number of 25 Dedicated Cores for each of their Sponsored Access 
relationships.\7\ The Exchange has since been able to procure 
additional servers with CPU Cores and also has a better understanding 
of User demand relative to its available space since the initial launch 
of Dedicated Cores. After seeing increased User demand, the Exchange 
proposed to increase that cap and provided that Members will be limited 
to a maximum number of 80 Dedicated Cores and Sponsoring Members will 
be limited to a maximum number of 35 Dedicated Cores for each of their 
Sponsored Access relationships.\8\ The Exchange noted at that time that 
it would continue monitoring Dedicated Core interest by all Users and 
allotment availability with the goal of increasing these limits to meet 
Users' needs if and when the demand is there and/or the Exchange is 
able to accommodate additional Dedicated Cores. Since then, the 
Exchange has determined that it is able to accommodate an increased cap 
relative to current demand. As such, the Exchange proposed to increase 
the cap to 120 Dedicated Cores for Members, effective December 1, 
2024.\9\ Sponsoring Members will continue to be limited to a maximum of 
35 Dedicated Cores for each of their Sponsored Access 
relationships.\10\
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    \7\ See Securities Exchange Act Release No. 100476 (July 9, 
2024), 89 FR 57482 (July 15, 2024) (SR-CboeBYX-2024-024).
    \8\ See Securities Exchange Act Release No. 101303 (October 10, 
2024), 89 FR 83740 (October 17, 2024) (SR-CboeBYX-2024-036).
    \9\ The prescribed maximum quantity of Dedicated Cores for 
Members applies regardless of whether that Member purchases the 
Dedicated Cores directly from the Exchange and/or through a Service 
Bureau. In a Service Bureau relationship, a customer allows its MPID 
to be used on the ports of a technology provider, or Service Bureau. 
One MPID may be allowed on several different Service Bureaus.
    \10\ The fee tier(s) applicable to Sponsoring Members are 
determined on a per Sponsored Access relationship basis and not on 
the combined total of Dedicated Cores across Sponsored Users. For 
example, under the proposed changes, a Sponsoring Member that has 
three Sponsored Access relationships is entitled to a total of 105 
Dedicated Cores for those 3 Sponsored Access relationships but would 
be assessed fees separately based on the 35 Dedicated Cores for each 
Sponsored User (instead of combined total of 105 Dedicated Cores). 
For example, a Sponsoring Member with 3 Sponsored Access 
relationships would pay $30,450 per month if each Sponsored Access 
relationship purchased the maximum 35 Dedicated Cores. More 
specifically, the Sponsoring Member would be provided 2 Dedicated 
Cores at no additional cost for each Sponsored User under Tier 1 
(total of 6 Dedicated Cores at no additional cost) and provided an 
additional 8 Dedicated Cores at $650 each for each Sponsored User, 5 
Dedicated Cores at $850 each for each Sponsored User and 20 
Dedicated Cores at $1,050 each for each Sponsored User (combined 
total of 99 additional Dedicated Cores).

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[[Page 22331]]

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\11\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \13\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(4) \14\ of the Act, which 
requires that Exchange rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among its Members and other 
persons using its facilities.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ Id.
    \14\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposal is reasonable because the 
Exchange is offering all Users who voluntarily choose to utilize 
Dedicated Cores up to two Dedicated Cores at no additional cost. 
Notably, of the Members that currently maintain Dedicated Cores, 43% 
maintain only 1 or 2 Dedicated Cores and therefore pay no additional 
fees. The Exchange believes the proposed fees are reasonable because 
Dedicated Cores provide a valuable service in that it can provide 
reduced latency, enhanced throughput, and improved performance compared 
to use of a shared CPU Core since a firm using a Dedicated Core is 
utilizing the full processing power of a CPU Core. The Exchange also 
emphasizes however, that the use of Dedicated Cores is not necessary 
for trading and as noted above, is entirely optional. Users can also 
continue to access the Exchange through shared CPU Cores at no 
additional cost. Indeed, only 35% of the Exchange's Members currently 
use Dedicated Cores and as noted above, of those who do, only 43% take 
only 1 or 2 Dedicated Cores at no additional cost. Depending on a 
firm's specific business needs, the proposal enables Users to choose to 
use Dedicated Cores in lieu of, or in addition to, shared CPU Cores (or 
as emphasized, not use Dedicated Cores at all). If a User finds little 
benefit in having Dedicated Cores based on its business model and 
trading strategies, or determines Dedicated Cores are not cost-
efficient for its needs or does not provide sufficient value to the 
firm, such User may continue its use of the shared CPU Cores, 
unchanged. The Exchange is not aware of any specific reason 
(operational or otherwise) why a firm would not partake in the use of 
the one to two free Dedicated Cores the Exchange offers. Indeed the 
Exchange does not believe that the set up a firm would undertake to use 
free Dedicated Cores offered by the Exchange is prohibitively difficult 
or burdensome; ultimately, whether or not a firm avails itself of the 
free Dedicated Cores is a business decision, and some firms may decide 
that the impact that Dedicated Cores may have is simply not beneficial 
or necessary to how that firm operates. The Exchange also has no plans 
to eliminate shared CPU Cores nor to require Users to purchase 
Dedicated Cores.
    The Exchange has seen general interest in Dedicated Cores from a 
variety of market participants, with varying size and business models. 
Such market participants include proprietary trading firms (who tend to 
be more latency sensitive), as well as sell-side market participants 
and buy-side market participants (who tend to be less latency 
sensitive). For background, proprietary trading firms utilize their own 
capital to trade without taking outside money from clients. Due to the 
nature of their respective businesses, the Exchange has classified 
proprietary trading firms as latency sensitive, and other groups, such 
as buy-side hedge funds, sell-side banks and sell-side non-banks (such 
as agency brokers) as non-latency sensitive. Proprietary trading firms' 
strategies may range from, market making, to relative value trading and 
arbitrage- these all rely on profiting from general market activity 
and, generally, requires faster entry and exit into trades and 
positions making proprietary trading firms more latency sensitive than 
other market segments. Buy-side hedge funds, banks and agency brokers 
are not as latency sensitive as generally the strategy for hedge funds 
is based on overall long-term positioning in the market, and banks and 
agency brokers may profit from commissions of customer order flow; both 
are generally strategies that are not reliant on speed to the same 
extent proprietary trading firms are. Further, Users have various 
reasons for obtaining Dedicated Cores. Some Users for example, may be 
seeking to further reduce latency or increase execution determinism, 
whereas others may use Dedicated Cores as a general risk mitigation by 
siloing their respective activity. For example, by using the Dedicated 
Core(s) to silo its respective activity, a firm may be able to mitigate 
risk during periods of heightened volatility as the firm will not need 
to compete for a shared resource (i.e., the shared core). Of further 
note, only 64% of Members that are propriety trading firms (who again, 
generally tend to be more latency sensitive) utilize Dedicated Cores, 
and of that 64%, 43% are only utilizing the 1 to 2 free Dedicated Cores 
available to all Users. As mentioned above, some non-latency sensitive 
firms have chosen to also adopt Dedicated Cores. 19% of Members that 
are not latency sensitive utilize Dedicated Cores, and of that 19%, 38% 
are only utilizing the 1 to 2 free Dedicated Cores available to all 
Users.
    The lack of universal, or even widespread, adoption by all such 
users therefore demonstrates that purchasing Dedicated Cores is not 
effectively a requirement to compete for any one type of market 
participant, including latency sensitive market participants. Instead, 
Dedicated Cores are an optional and voluntary connectivity offering, 
which market participants are free to choose whether or not to utilize 
based on whether they meet their unique business needs. Moreover, the 
Exchange has received overwhelming positive feedback and support for 
Dedicated Cores from the firms that have chosen to utilize these in 
furtherance of their respective needs, with some Users even noting that 
they have moved more of their order flow to the Exchange and its

[[Page 22332]]

affiliated equities exchanges (the ``Equities Exchanges'') as they have 
noticed both better fills and greater consistency of order execution at 
the Equities Exchanges. This demonstrates that despite any incurred 
costs for Users that choose to purchase Dedicated Cores, it is 
ultimately a net win for them as they benefit from better execution. 
The Exchange believes it also demonstrates that Users find the proposed 
fees to be both reasonable and have benefited from purchasing or, are 
alternatively benefiting from the proposed one or two free Dedicated 
Cores available at no additional cost. The Exchange believes this is 
shown by both the level of demand for Dedicated Cores and the feedback 
from market participants that have used the Dedicated Cores for its 
unique business needs, including as described above. The Exchange also 
believes it's notable that no negative comment letters in connection 
with the proposed pricing have been received since the Exchange first 
filed proposed fees for Dedicated Cores back on May 6, 2024. 
Additionally, as noted earlier, Users can (and many have) decide that 
utilizing even a free Dedicated Core is not needed for their business. 
The Exchange also notes it has not received any feedback for Users that 
raise concerns over the barrier to entry to use Dedicated Cores, 
including notably the free Dedicated Cores- nor is the Exchange aware 
of any reason why a firm would ultimately choose not to use the free 
Dedicated Cores, other than it is not necessary for its business. 
Ultimately, this is a business decision that each User must make and is 
best suited to determine and will ultimately depend on the priorities 
and strategies of that User's respective business needs.
    The Exchange also notes that at least one other exchange also has a 
comparable offering.\15\ The Nasdaq Stock Market, LLC (``Nasdaq''), 
introduced the Dedicated Ouch Port Infrastructure in 2014 \16\ which 
allows a member firm to assign up to 30 of its OUCH ports to a 
dedicated server infrastructure for its exclusive use.\17\ The 
Dedicated OUCH server handles only the subscribing member firm's 
message traffic sent through their ports on the Dedicated OUCH to 
Nasdaq's system.\18\ Similarly, as previously described, a Dedicated 
Core only handles that subscribing firm's messaging activity. Nasdaq 
notes that with its Dedicated OUCH offering, member firms can develop a 
tailored solution by controlling their message traffic in order to 
optimize their trading strategies.\19\ As described above with 
Dedicated Cores, one of the benefits is greater execution determinism 
as subscribers only need to account for their order flow when using a 
Dedicated Core, similar to the existing Nasdaq Dedicated OUCH offering. 
In addition to using Dedicated Cores and Dedicated OUCH for the purpose 
of greater execution determinism, firms may also use either offering 
for greater risk mitigation as, with either offering, the subscribing 
firm only needs to take their specific messaging traffic into account. 
Nasdaq notes as well that its Dedicated OUCH offering is wholly 
optional and therefore member firms are not compelled to subscribe and 
that its offering is pro-competitive as it adds an additional 
connectivity option available to Nasdaq members.\20\ Similar to the 
Dedicated OUCH offering, the Exchange has noted that no User is 
required to purchase or to use the two free Dedicated Cores offered to 
all Users.
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    \15\ See The Nasdaq Stock Market, Equity 7 Pricing Schedule, 
Section 115(g)(3), Dedicated Ouch Port Infrastructure.
    \16\ See Securities Exchange Act Release No. 70693 (October 16, 
2013), 78 FR 62761 (October 22, 2013) (SR-NASDAQ-2013-131).
    \17\ See supra note 15.
    \18\ See Securities Exchange Act Release No. 70036 (July 25, 
2013), 78 FR 45993 (July 30, 2013) (SR-NASDAQ-2013-097).
    \19\ Id.
    \20\ Id.
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    Despite these similarities, there are some differences. 
Specifically, with the Nasdaq OUCH offering, a member firm would need 
to purchase an entire server, of which, 30 OUCH ports could be utilized 
on the Dedicated OUCH server--a participant may purchase up to four 
Dedicated OUCH servers based on its needs.\21\ In contrast, the 
Exchange's offering allows for a purchase by cores (as opposed to an 
entire server), allowing a participant to more efficiently scale its 
business by purchasing only the number of cores that it needs. 
Ultimately, the Exchange's offering is more akin to a service offering 
while the Nasdaq offering is more akin to an infrastructure offering 
(and as such, the pricing structure does differ)--both offerings better 
enable a firm to utilize the full processing power of a CPU Core.
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    \21\ See https://nasdaqtrader.com/
Trader.aspx?id=OUCH#:~:text=Each%20server%20can%20house%20up%20to%20a
%20maximum,Nasdaq%20Market%20Sales%20at%20%2B1%20800%20846%200477.
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    A Dedicated OUCH Port Infrastructure subscription is available to a 
member firm for a fee of $5,000 per month, which is in addition to the 
standard fees assessed for each OUCH port. A one-time installation fee 
of $5,000 is assessed to subscribers for each Dedicated OUCH Port 
Server subscription.\22\ In contrast, the Exchange offers 1-2 Dedicated 
Cores at no cost, making this widely available to any participant who 
may find a benefit from using this offering. Additionally, by the 
Exchange not charging an installation fee upfront, participants are 
able to try the offering at no cost, by receiving up to two Dedicated 
Cores at no cost to the User. The Exchange's model allows for 
widespread participation by all who wish to use Dedicated Cores--the 
steep initial cost of Nasdaq's model of spending, at a minimum, $10,000 
for the first month requires a heavy investment, which in the case of 
smaller participants, may not be feasible. In contrast, the Exchange's 
model of providing up to two Dedicated Cores at no cost, allows 
participants to easily utilize this service if they believe it is 
helpful for their business needs. Moreover, the Exchange's service 
offering also provides more Users with more modest CPU capacity needs a 
zero-cost option, as well as the ability to buy only as many Dedicated 
Cores that they need, whereas Nasdaq's Dedicated OUCH offering requires 
a User to buy all cores offered on a single server (even if a firm does 
not have the corresponding full amount of 30 ports), with no discounted 
or fee waiver for the first two cores, as well as no ability to buy 
fewer cores than necessary.
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    \22\ See The Nasdaq Stock Market Rulebook, Equity 7 Pricing 
Schedule.
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    Lastly, the Exchange emphasizes that order processing itself is not 
affected by the introduction of Dedicated Cores. No relevant changes 
are intended to the matching engine, which is, and remains, the main 
component of the Exchange's infrastructure being responsible for the 
actual processing of orders. While Users of Dedicated Cores may notice 
a latency reduction, this is an inherent byproduct of introducing 
improved technology.\23\
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    \23\ Moreover, there has been a longstanding history of 
exchanges providing enhanced technology where the latency reduction 
that follows is a natural result. For example, other exchanges may 
offer a variety of co-location services where subscribers of these 
services may benefit from lower latency based on the specific 
offering they choose based on their business needs. See e.g., The 
Nasdaq Stock Market General 8 Connectivity, Section 1 Co-Location 
Services (demonstrating a range of cabinet offerings).
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    The Exchange also believes that the proposed Dedicated Core fees 
are equitable and not unfairly discriminatory because they continue to 
be assessed uniformly to similarly situated Users in that all Users who

[[Page 22333]]

choose to purchase Dedicated Cores will be subject to the same proposed 
tiered fee schedule. Moreover, all Users are entitled to up to 2 
Dedicated Cores at no additional cost and as previously discussed, 43% 
of all Members that take Dedicated Cores (including both latency 
sensitive and non-latency sensitive Members) take only 1 or 2 Dedicated 
Cores at no additional cost. The Exchange believes the proposed 
ascending fee structure is also reasonable, equitable and not unfairly 
discriminatory as it is designed so that firms that use a higher 
allotment of the Exchange's finite number of Dedicated Cores pay higher 
rates, rather than placing that burden on market participants that have 
more modest needs who will have the flexibility of obtaining Dedicated 
Cores at lower price points in the lower tiers. As such, the proposed 
fees do not favor certain categories of market participants in a manner 
that would impose a burden on competition; rather, the ascending fee 
structure reflects the (finite) resources consumed by the various needs 
of market participants--that is, the lowest Dedicated Core consuming 
Users pay the least, and highest Dedicated Core consuming Users pay the 
most. The Exchange believes that such pricing further creates a lower 
barrier to entry for all Users, making this service widely available to 
all who deem it helpful for their business, including those with more 
modest needs. Other exchanges similarly assess higher fees to those 
that consume more Exchange resources.\24\ Moreover, those consuming 
more Dedicated Cores do so if they find a benefit in having higher 
quantities of Dedicated Cores based on their respective business needs. 
The proposed tier structure is also designed to encourage firms to 
manage their needs in a fair manner and to prevent the Exchange from 
being required to expend large amounts of limited resources in order to 
provide an additional number of Dedicated Cores or put the Exchange in 
a position that it cannot accommodate demand. Moreover, as discussed 
above and in more detail below, the Exchange cannot currently offer an 
unlimited number of Dedicated Cores due in part to physical space 
constraints in the third-party data center. The Exchange believes the 
proposed ascending fee structure is therefore another appropriate 
means, in conjunction with an established cap, to manage this finite 
resource and ensure the resource is apportioned more fairly.
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    \24\ See e.g., Cboe U.S. Options Fees Schedule, BZX Options, 
Options Logical Port Fees, Ports with Bulk Quoting Capabilities.
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    The Exchange believes it is reasonable to limit the number of 
Dedicated Cores Users can purchase because the Exchange has a finite 
amount of space in its third-party data centers to accommodate CPU 
cores, including Dedicated Cores. The Exchange must also take into 
account timing and cost considerations in procuring additional 
Dedicated Cores and related hardware such as servers, switches, optics 
and cables, as well as the readiness of the Exchange's data center 
space to accommodate additional Dedicated Cores in the Exchange's 
respective Order Handler Cabinets.\25\ Moreover, procuring data center 
space has grown to be more challenging than it was five years ago with 
the increased demand for data center space. For example, the U.S. 
colocation data center market has doubled in size in just four years. 
In addition to the Exchange's rollout of Dedicated Cores, the Exchange 
is mindful of its other business areas and the need to continue to be 
mindful of its existing, external restraints in procuring additional 
space in this area. The Exchange has, and will continue to, monitor 
market participant demand and space availability and endeavor to adjust 
the limit if and when the Exchange is able to acquire additional space 
and power within the third-party data centers and/or additional CPU 
Cores to accommodate additional Dedicated Cores.\26\ The Exchange 
monitors its capacity and data center space and thus is in the best 
place to determine these limits and modify them as appropriate in 
response to changes to this capacity and space, as well as market 
demand. Indeed, the Exchange has already increased the prescribed 
maximum since the launch of Dedicated Cores on May 6, 2024 as a result 
of evaluating the demand relative to Dedicated Cores availability and 
proposes to increase the prescribed maximum again due to the Exchange's 
continued ability to support current demand relative to current 
availability.\27\ As another example, the Exchange's affiliate Cboe 
EDGA Exchange, Inc. has increased the prescribed maximum limit three 
times since the launch of Dedicated Cores on its exchange on February 
26, 2024 as a result of evaluating the demand relative to Dedicated 
Cores availability.\28\ The proposed increased limits continue to apply 
uniformly to similarly situated market participants (i.e., all Members 
are subject to the same limit and all Sponsored Participants are 
subject to the same limit, respectively). The Exchange believes it's 
not unfairly discriminatory to provide for different limits for 
different types of Users. For example, the Exchange believes it's not 
unfairly discriminatory to provide for an initial lower limit to be 
allocated for Sponsored Participants because unlike Members, Sponsored 
Participants are able to access the Exchange without paying a 
Membership Fee. Members also have more regulatory obligations and risk 
that Sponsored Participants do not. For example, while Sponsored 
Participants must agree to comply with the Rules of the Exchange, it is 
the Sponsoring Member of that Sponsored Participant that remains 
ultimately responsible for all orders entered on or through the 
Exchange by that Sponsored Participant. The industry also has a history 
of applying fees differently to Members as compared to Sponsored 
Participants.\29\ Lastly, the Exchange believes its proposed maximum 
limits, and distinction between Members and Sponsored Participants, is 
another appropriate means to help the Exchange manage its allotment of 
Dedicated Cores and better ensure this finite resource is apportioned 
fairly.
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    \25\ The Exchange notes that it cannot currently convert shared 
CPU cores into Dedicated Cores.
    \26\ The Exchange does not have any Users that take Dedicated 
Cores at or near the maximum limits and the average number of 
Dedicated Cores used for the Exchange is 12.
    \27\ See Securities Exchange Act Release No. 100476 (July 9, 
2024), 89 FR 57482 (July 15, 2024) (SR-CboeBYX-2024-024).
    \28\ See Securities Exchange Act Release No. 99983 (April 17, 
2024), 89 FR 30418 (April 23, 2024) (SR-CboeEDGA-2024-014) 
Securities Exchange Act Release No. 100300 (June 10, 2024), 89 FR 
50653 (June 14, 2024) (SR-CboeEDGA-2024-020); and Securities 
Exchange Act Release No. 100736 (August 21, 2024), 89 FR 67696 
(August 15, 2024) (SR-CboeEDGA-2024-032).
    \29\ See e.g., Securities Exchange Act Release No. 68342 
(December 3, 2012), 77 FR 73096 (December 7, 2012) (SR-CBOE-2012-
114) and Securities Exchange Act Release No. 66082 (January 3, 
2012), 77 FR 1101 (January 9, 2012) (SR-C2-2011-041).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary in 
furtherance of the purposes of the Act because the proposed tiered fee 
structure will apply equally to all similarly situated Users that 
choose to use Dedicated Cores. As discussed above, Dedicated Cores are 
optional and Users may choose to utilize Dedicated Cores, or not, based 
on their views of the additional benefits and added value provided by 
utilizing a Dedicated Core. The Exchange believes the proposed fee will 
be assessed proportionately to the potential

[[Page 22334]]

value or benefit received by Users with a greater number of Dedicated 
Cores and notes that Users may determine at any time to cease using 
Dedicated Cores. As discussed, Users can also continue to access the 
Exchange through shared CPU Cores at no additional cost. Finally, all 
Users will be entitled to two Dedicated Cores at no additional cost.
    Next, the Exchange believes the proposed rule change does not 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As previously 
discussed, the Exchange operates in a highly competitive market, 
including competition for exchange memberships. Market Participants 
have numerous alternative venues that they may participate on, 
including 15 other equities exchanges, as well as off-exchange venues, 
where competitive products are available for trading. Indeed, 
participants can readily choose to submit their order flow to other 
exchange and off-exchange venues if they deem fee levels at those other 
venues to be more favorable. Further, as described above, Nasdaq also 
already provides a similar offering.\30\
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    \30\ See The Nasdaq Stock Market, Equity 7 Pricing Schedule, 
Section 115(g)(3), Dedicated Ouch Port Infrastructure.
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    Moreover, the Commission has repeatedly expressed its preference 
for competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Specifically, in 
Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \31\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. Securities and Exchange Commission, the D.C. 
Circuit stated as follows: ``[n]o one disputes that competition for 
order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. 
national market system, buyers and sellers of securities, and the 
broker-dealers that act as their order-routing agents, have a wide 
range of choices of where to route orders for execution'; [and] `no 
exchange can afford to take its market share percentages for granted' 
because `no exchange possesses a monopoly, regulatory or otherwise, in 
the execution of order flow from broker dealers'. . . .''.\32\ 
Accordingly, the Exchange does not believe its proposed change imposes 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \31\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \32\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \33\ and paragraph (f) of Rule 19b-4 \34\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBYX-2025-010 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CboeBYX-2025-010. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBYX-2025-010 and should 
be submitted on or before June 17, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-09388 Filed 5-23-25; 8:45 am]
BILLING CODE 8011-01-P