88080 Federal Register / Vol. 89, No. 215 / Wednesday, November 6, 2024 / Notices 

22 Id. 

23 Id. 

24 15 U.S.C. 78q–1. 

25 15 U.S.C. 78s(b)(2). 

26 In approving the Proposed Rule Change, the 

Commission considered its impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

27 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 99620 

(Feb. 28, 2024), 89 FR 15907 (Mar. 5, 2024) 

(‘‘Notice’’). Comments received can be found on the 

Commission’s website at: https://www.sec.gov/ 

comments/sr-cboe-2024-008/srcboe2024008.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 99963 

(Apr. 16, 2024), 89 FR 29389 (Apr. 22, 2024). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 100256 

(May 31, 2024), 89 FR 48463 (June 6, 2024) (‘‘OIP’’). 

8See Securities Exchange Act Release No. 100880 

(Aug. 30, 2024), 89 FR 72537 (Sept. 5, 2024). 

9 In disapproving the proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). See infra notes 130– 

138 and accompanying text. 

10See Notice, 89 FR 15907 n.5. 

11 Id. 

12 ‘‘OEMSs generally permit users to route orders 

to other market participants that use the same 

OEMS platform or directly to trading venues. OEMS 

platforms generally provide their users with the 

capability to create orders, route them for 

execution, and input parameters to control the size, 

timing, and other variables of their trades.’’ Notice, 

89 FR 15907–08. For additional description of the 

functionalities of an OEMS, see id. 

13 15 U.S.C. 78c(a)(2). Section 3(a)(1) defines an 

‘‘exchange’’ as ‘‘any organization, association, or 

group of persons . . . which constitutes, maintains, 

or provides a market place or facilities for bringing 

together purchasers and sellers of securities or for 

otherwise performing with respect to securities the 

functions commonly performed by a stock 

exchange.’’ The statute then specifically provides 

that an exchange ‘‘includes . . . the market 

facilities maintained by such exchange.’’ 15 U.S.C. 

78c(a)(1). 

14See infra note 19 and accompanying text 

defining the term ‘‘Exchange-affiliated OEMS’’. 

15References to ‘‘Silexx’’ are to the OEMS Silexx 

(the Silexx system) that is provided by the legal 

entity, Cboe Silexx, LLC. 

16See Notice, 89 FR 15907 and n.3. 

agency, such as DTC, be designed to, 

among other things, promote the prompt 

and accurate clearance and settlement of 

securities transactions.22 The 

Commission believes that the Proposed 

Rule Change is consistent with Section 

17A(b)(3)(F) of the Act for the reasons 

stated below. 

The Proposed Rule Change would 

amend the Settlement Guide to reflect 

the decommission of ID Net and remove 

the ID Net Fee from the Fee Guide. As 

discussed in Parts II and III, ID Net is 

an underused service that is 

operationally complex to maintain, and 

its main benefit is to broker/dealers’ 

streamline clearance and settlement of 

ID Net-eligible Affirmed Transactions, 

which may otherwise settle on a tradefor-trade basis. As such, ID Net’s 

decommission would have minimal 

impact on DTC and its Participants 

considering its limited usage. Affirmed 

Transactions that would have otherwise 

been directed to ID Net will settle tradefor-trade directly between 

counterparties, like most other Affirmed 

Transactions currently do. Therefore, 

these transactions will continue to settle 

promptly and accurately, as other 

Affirmed Transactions do, outside of the 

ID Net Service. For these reasons, the 

Commission finds that the Proposed 

Rule Change should continue to support 

DTC’s ability to provide prompt and 

accurate clearance and settlement of 

securities transactions, consistent with 

Section 17A(b)(3)(F) of the Act.23

V. Conclusion 

On the basis of the foregoing, the 

Commission finds that the Proposed 

Rule Change is consistent with the 

requirements of the Act, and in 

particular, with the requirements of 

Section 17A of the Act 24 and the rules 

and regulations promulgated 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 25 that 

proposed rule change SR–DTC–2024– 

010, be, and hereby is, approved.26

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–25726 Filed 11–5–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101491; File No. SR– 

CBOE–2024–008] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Order Disapproving a 

Proposed Rule Change To Adopt a 

New Rule Regarding Order and 

Execution Management Systems 

October 31, 2024. 

I. Introduction 

On February 13, 2024, Cboe 

Exchange, Inc. (‘‘Cboe’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to section 

19(b)(1) of the Securities Exchange Act 

of 1934 (the ‘‘Exchange Act’’ or ‘‘Act’’),1

and Rule 19b–4 thereunder,2 a proposal 

to adopt a new rule regarding order and 

execution management systems 

(‘‘OEMSs’’). The proposed rule change 

was published for comment in the 

Federal Register on March 5, 2024.3

On April 16, 2024, pursuant to section 

19(b)(2) of the Exchange Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to approve or 

disapprove the proposed rule change.5

On May 31, 2024, the Commission 

instituted proceedings under section 

19(b)(2)(B) of the Exchange Act 6 to 

determine whether to approve or 

disapprove the proposed rule change.7

The Commission received comment 

letters in response to the Notice and the 

OIP. On August 30, 2024, the 

Commission issued a notice of 

designation of a longer period of time 

within which to approve or disapprove 

the proposed rule change.8 For the 

reasons discussed below, this order 

disapproves the proposed rule change.9

II. Description of the Proposed Rule 

Change 

Nine years ago, the Exchange’s parent 

company, Cboe Global Markets, Inc, first 

acquired an OEMS, followed by another 

OEMS approximately two years later.10

Since the acquisition of these assets, 

Cboe has submitted filings for each 

OEMS (which can be used to route 

orders to the Exchange).11 Now, as 

described in more detail in the Notice, 

the Exchange seeks Commission 

approval of a rule providing that any 

OEMS 12 that meets the conditions in 

proposed Rule 3.66 will not be deemed 

a facility of the Exchange as that term 

is defined in the Act. Section 3(a)(2) of 

the Act defines ‘‘facility’’ as follows: 

The term ‘‘facility’’ when used with respect 

to an exchange includes its premises, 

tangible or intangible property whether on 

the premises or not, any right to the use of 

such premises or property or any service 

thereof for the purpose of effecting or 

reporting a transaction on an exchange 

(including, among other things, any system of 

communication to or from the exchange, by 

ticker or otherwise, maintained by or with 

the consent of the exchange), and any right 

of the exchange to the use of any property or 

service.13

The Exchange’s proposal would apply 

to, among others, the Exchangeaffiliated OEMS known as Silexx.14

Silexx is developed, offered, and 

maintained by Cboe Silexx, LLC. The 

Exchange and Cboe Silexx, LLC are each 

a wholly-owned subsidiary of Cboe 

Global Markets, Inc.15

The Exchange states that a function of 

OEMSs (such as Silexx) is to allow 

market participants to enter and route 

orders to trade securities for execution 

on any U.S. exchange, including the 

Exchange.16 The Exchange 


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17See Notice, 89 FR 15907, n.4–5 (distinguishing 

use of an OEMS to enter and route orders from use 

of an OEMS to manage executions and perform 

other tasks); See also id. at 15910 (stating ‘‘market 

participants may, among other things, use OEMS 

platforms to enter and route orders for ultimate 

execution at a trading venue, which may cause an 

OEMS to be deemed to be used for the ‘‘purpose 

of effecting or reporting a transaction on an 

exchange’’ under the facility definition). 

18See Notice, 89 FR 15908. 

19 Id. at 15909. 

20See Cboe By-Laws Section 1.1 (defining the 

term to mean any individual, corporation, 

partnership, limited liability company or other 

entity authorized by the Rules that holds a Trading 

Permit. Pursuant to Cboe Rule 1.1, a Trading Permit 

is a license issued by the Exchange that grants the 

holder the right to access one or more of the 

facilities of the Exchange for the purpose of 

effecting transactions in securities traded on the 

Exchange without the services of another person 

acting as broker, and otherwise to access the facility 

of the Exchange for purposes of trading or reporting 

transactions or transmitting orders or quotations in 

securities traded on the Exchange.). 

21See proposed Rule 3.66(a). 

22See proposed Rule 3.66(b). 

23See proposed Rule 3.66(c). 

24See proposed Rule 3.66(d). 

25See proposed Rule 3.66(e). 

26See proposed Rule 3.66(f). 

27See proposed Rule 3.66(g). 

28See proposed Rule 3.66(h). 

29See Notice, 89 FR 15908–15914. 

30See Notice, 89 FR 15908–09. Since 2017, 

however, the Exchange has been submitting rule 

filings pursuant to the requirements of section 19(b) 

of the Act in connection with its OEMS Silexx and 

in connection with another previously-offered 

OEMS platform. See Securities Exchange Act 

Release Nos. 82088 (Nov. 15, 2017), 82 FR 55443 

(Nov. 21, 2017) (SR–CBOE–2017–068); and 75302 

(June 25, 2015), 80 FR 37685 (July 1, 2015) (SR– 

CBOE–2015–062). 

31See Notice, 89 FR 15908–09. 

32Notice, 89 FR 15908, n.13. 

33Pursuant to the Exchange’s fee schedule, port 

fee waivers are only available to Silexx users. See 

Cboe Options Exchange Fee Schedule at https://

cdn.cboe.com/resources/membership/Cboe_

FeeSchedule.pdf. (last visited Oct. 16, 2024). 

34 15 U.S.C. 78s(b)(2)(C). 

35 15 U.S.C. 78s(b)(2)(C)(i). 

36 15 U.S.C. 78s(b)(2)(C)(ii); see also 17 CFR 

201.700(b)(3). 

37 17 CFR 201.700(b)(3). 

acknowledges that this function of 

Silexx has been subject to the rule filing 

requirements of section 19(b) of the 

Exchange Act since 2017.17 The 

Exchange seeks to remove certain 

OEMSs, including Silexx, from the rule 

filing requirements of section 19(b), and 

therefore Commission oversight, if the 

Exchange and any affiliated OEMS are 

‘‘ultimately operated as a separate 

business.’’ 18

To accomplish this, the Exchange 

proposes new Rule 3.66, which would 

provide that, ‘‘for so long as the 

Exchange provides or is affiliated with 

any entity that provides, or the 

Exchange or an affiliate has a 

contractual relationship with any entity 

that provides, an OEMS platform’’, such 

OEMS (hereafter an ‘‘Exchange-affiliated 

OEMS’’) will not be regulated as a 

‘‘facility’’ of the Exchange and thus not 

subject to section 6 of the Act if it meets 

certain conditions.19 The proposed 

conditions would provide that: 

(a) use of the OEMS is voluntary (i.e., 

solely within the discretion of a Trading 

Permit Holder (‘‘TPH’’) 20) and not 

required for a TPH to access to the 

Exchange (i.e., the OEMS is a 

nonexclusive means of access to the 

Exchange); 21

(b) if a TPH using the OEMS 

establishes a direct connection to the 

Exchange via an Exchange port, that 

connection is established in the same 

manner and in accordance with the 

same terms, conditions, and fees as any 

third-party OEMS as set forth in the 

Exchange’s rules, technical 

specifications, and fees schedule; 22

(c) the OEMS (or the entity that owns 

the OEMS) is not a registered brokerdealer; 23

(d) for any orders ultimately routed 

through the OEMS to the Exchange: 

(1) users and their brokers are solely 

responsible for routing decisions; and 

(2) the Exchange processes those 

orders in the same manner as any other 

orders received by the Exchange (i.e., 

orders submitted through the OEMS to 

the Exchange receive no preferential 

treatment on the Exchange); 24

(e) any fees charged to a user of the 

OEMS are unrelated to that user’s 

Exchange activity or to Exchange fees 

set forth on the Exchange’s fees 

schedule; 25

(f) the OEMS uses any premises or 

service from the Exchange that is a 

facility, such as market data, pursuant to 

the same terms, conditions, and fees as 

any other user of Exchange premises 

and services as set forth in the 

Exchange’s rules, technical 

specifications, and fees schedule; 26

(g) a third-party not required to 

register as a national securities exchange 

under section 6 of the Act can offer a 

similar OEMS; 27 and 

(h) the Exchange has established and 

maintains procedures and internal 

controls reasonably designed to prevent 

the OEMS from receiving any 

competitive advantage or benefit as a 

result of its affiliation/relationship with 

the Exchange, including the provision of 

information to the entity or personnel 

operating the OEMS regarding updates 

to the system (such as technical 

specifications) until such information is 

available generally to similarly situated 

market participants.28

In the Notice, the Exchange states that 

unaffiliated OEMSs are generally not 

subject to the rule filing requirements of 

section 19(b) of the Act, and further 

states that when the Exchange or an 

Exchange affiliate owns an OEMS 

platform, the Exchange has been 

advised by Commission staff that 

Exchange affiliation with an OEMS 

causes the OEMS routing functionality 

to be considered a ‘‘facility’’ under the 

Act and thus subject to the rule filing 

requirements under section 19(b) of the 

Act.29 The Exchange states that this 

should not be so: that even if an OEMS 

is offered by the Exchange, an Exchange 

affiliate, or pursuant to a contractual 

relationship, if it is operated as a 

separate business from the Exchange 

and is operated on the same terms as 

third-party OEMSs, it is not a facility as 

defined by the Act.30 The Exchange 

seeks to incorporate in its rulebook its 

interpretation of the definitions of a 

‘‘facility’’ of an ‘‘exchange’’ as set forth 

in sections 3(a)(2) and (3)(a)(1) of the 

Act, respectively. 

The Exchange states that an OEMS 

that is offered by the Exchange, an 

Exchange affiliate, or pursuant to a 

contractual relationship with the 

Exchange, and that is operated as a 

separate business from the Exchange, 

receives no competitive advantage over 

other OEMS platforms as a result of its 

affiliation with the Exchange as long as 

the conditions of proposed Rule 3.66 are 

followed.31 The Exchange also ‘‘notes it 

currently offers certain port fee waivers 

to users of Silexx.’’ 32 However, the 

Exchange does not provide fee waivers 

to third party OEMS users that are not 

Silexx customers.33

III. Discussion and Commission 

Findings 

A. The Applicable Standard for Review 

Under Section 19(b)(2)(C) of the 

Exchange Act, 34 the Commission shall 

approve a proposed rule change of a 

self-regulatory organization (‘‘SRO’’) if it 

finds that such proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder that are 

applicable to such organization.35 The 

Commission shall disapprove a 

proposed rule change if it does not make 

such a finding.36 Rule 700(b)(3) of the 

Commission’s Rules of Practice states 

that the ‘‘burden to demonstrate that a 

proposed rule change is consistent with 

the [Exchange Act] and the rules and 

regulations issued thereunder . . . is on 

the self-regulatory organization that 

proposed the rule change’’ and that a 

‘‘mere assertion that the proposed rule 

change is consistent with those 

requirements . . . is not sufficient.’’ 37


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38 Id. 

39See id. 

40Susquehanna Int’l Group, LLP v. Securities and 

Exchange Commission, 866 F.3d 442, 447 (D.C. Cir. 

2017). 

41See Intercontinental Exch., Inc. (ICE), et al. v. 

SEC, 23 F.4th 1013 (D.C. Cir. 2022), at 1026 (‘‘ICE 

Decision’’). 

42See 15 U.S.C 78(c)(a)(2) and (1) (defining 

‘‘facility’’ and ‘‘exchange’’). 

43See 4 T. Hazen, Law of Securities Regulation, 

section 14.8 (2024); S. Rep. No. 73–792, at 4, 6 (Apr. 

17, 1934). 

44See 15 U.S.C. 78s(b)(1) (governing the 

requirements for Commission process and review of 

proposed rule changes); 17 CFR 240.19b–4 (setting 

forth the requirements for submitting proposed rule 

changes). 

45See 15 U.S.C. 78f(b)(4), (b)(5), and (b)(8) (setting 

forth some of the requirements applicable to a 

national securities exchange). 

46 15 U.S.C. 78f(b)(4), (5) and (b)(8). 47See, e.g., Securities Exchange Act Release Nos. 

82088 (Nov. 15, 2017), 82 FR 55443 (Nov. 21, 2017) 

(SR–CBOE–2017–068) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

to Describe Functionality of and Adopt Fees for a 

New Front-End Order Entry and Management 

Platform); and 75302 (June 25, 2015), 80 FR 37685 

(July 1, 2015) (SR–CBOE–2015–062) (Notice of 

Filing and Immediate Effectiveness of a Proposed 

Rule Change Relating to Front-End Order Entry and 

Management Tools in Connection With Purchase of 

Livevol Assets). These filings were submitted 

pursuant to section 19(b)(3)(A) of the Act for 

immediate effectiveness. Relatedly, the Commission 

has long considered the relationship between 

services offered by affiliates of a registered national 

securities exchange. See Regulation of Exchanges 

and Alternative Trading Systems, Securities 

Exchange Act No. 40760 (Dec. 8, 1998), 63 FR 

70844 at 70891 (Dec. 22, 1998) (‘‘A subsidiary or 

affiliate of a registered exchange could not integrate, 

or otherwise link the alternative trading system 

with the exchange, including using the premises or 

property of such exchange for effecting or reporting 

a transaction, without being considered a ‘facility 

of the exchange.’’’). See also infra note 59 (citing 

other examples where the Commission has 

considered services offered by affiliates of a 

registered national securities exchange). 

48See Notice at 89 FR 15909. 

49 15 U.S.C. 78s(b). 

50 15 U.S.C. 78f(b). 

51See proposed Rule 3.66. 

52See Letter from Tyler Gellasch, President and 

CEO, Healthy Markets Association, to Vanessa 

Countryman, Secretary, Securities and Exchange 

Commission (Mar. 25, 2024) (‘‘Healthy Markets 

Letter’’); Letter from Gregory Babyak, Global Head 

of Regulatory Affairs, Bloomberg L.P., to Vanessa 

Countryman, Secretary, Securities and Exchange 

Commission (Mar. 26, 2024) (‘‘Bloomberg Letter I’’); 

Letter from Jim Considine, Chief Financial Officer, 

McKay Brothers, LLC, to Vanessa Countryman, 

Secretary, Securities and Exchange Commission 

(Mar. 26, 2024) (‘‘McKay Brothers Letter’’); Letter 

from Gregory Babyak, Global Head of Regulatory 

Affairs, Bloomberg L.P., to Vanessa Countryman, 

Secretary, Securities and Exchange Commission 

(May 24, 2024) (‘‘Bloomberg Letter II’’); Letter from 

Ellen Greene, Managing Director, Equities and 

Options Market Structure, and Joseph Corcoran, 

Managing Director, Associate General Counsel, 

SIFMA, to Vanessa Countryman, Secretary, 

Securities and Exchange Commission (Jun. 18, 

2024) (‘‘SIFMA Letter I’’); Letter from Gregory 

Babyak, Global Head of Regulatory Affairs, 

Bloomberg L.P., to Vanessa Countryman, Secretary, 

Securities and Exchange Commission (Jun. 27, 

2024) (‘‘Bloomberg Letter III’’); Letter from Ellen 

Greene, Managing Director, Equities and Options 

Market Structure, and Joseph Corcoran, Managing 

Director, Associate General Counsel, SIFMA, to 

Vanessa Countryman, Secretary, Securities and 

Exchange Commission (Oct. 14, 2024) (‘‘SIFMA 

Letter II’’); and Letter from Gregory Babyak, Global 

Head of Regulatory Affairs, Bloomberg L.P., to 

Vanessa Countryman, Secretary, Securities and 

Exchange Commission (Oct. 17, 2024) (‘‘Bloomberg 

Letter IV’’). 

Rule 700(b)(3) also states that ‘‘the 

description of a proposed rule change, 

its purpose and operation, its effect, and 

a legal analysis of its consistency with 

applicable requirements must all be 

sufficiently detailed and specific to 

support an affirmative Commission 

finding.’’ 38 Any failure of an SRO to 

provide this information may result in 

the Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Exchange Act and the 

applicable rules and regulations.39

Moreover, ‘‘unquestioning reliance’’ on 

an SRO’s representations in a proposed 

rule change is not sufficient to justify 

Commission approval of a proposed rule 

change.40

B. Overview 

Whether an Exchange-affiliated OEMS 

is a facility of the Exchange is a 

threshold question.41 If an Exchangeaffiliated OEMS satisfies the statutory 

definitions of ‘‘facility’’ of an 

‘‘exchange’’ in section 3 of the Exchange 

Act, then the facility is a part of the 

Exchange and is subject to Commission 

oversight.42 When it enacted section 6 of 

the Exchange Act, Congress required 

exchanges to register with the 

Commission in order to ensure more 

oversight than had previously existed.43

Section 19(b) of the Exchange Act 44

requires that an SRO file with the 

Commission proposed rules or any 

proposed changes in, additions to, or 

deletions from its rules, and establishes 

the process and standard for 

Commission review of these rule filings. 

During that process, the Commission 

reviews whether such rule filings, 

including rule filings regarding 

exchange facilities, are consistent with 

the requirements of the Exchange Act, 

particularly section 6.45 Section 6(b)(4) 

requires that the rules of an exchange 

‘‘provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among its members and issuers and 

other persons using its facilities;’’ 

section 6(b)(5) requires, among other 

things, that the rules of an exchange be 

designed 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; and 

are not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers’’; and section 

6(b)(8) requires that the rules of the 

exchange not ‘‘impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes’’ of the Exchange Act.46

The Exchange has previously filed 

proposed rule changes in connection 

with its affiliated OEMSs,47 but here 

proposes a rule that would provide that 

its affiliated OEMSs are not subject to 

regulation by the Commission under 

section 6(b) or section 19(b) of the Act.48

As such, the instant proposal presents 

three questions: (1) whether the 

Exchange-affiliated OEMS (Silexx) for 

which the Exchange has been 

submitting rule filings is a ‘‘facility’’ of 

the Exchange; (2) if so, whether 

proposed Rule 3.66 alters that 

conclusion; and (3) whether proposed 

Rule 3.66 is consistent with the 

Exchange Act, including section 6(b). 

We conclude that the Exchangeaffiliated OEMS Silexx is a facility of 

the Exchange under section 3 of the 

Exchange Act. We also conclude that 

the Exchange has not met its burden to 

demonstrate that the proposed rule 

change is consistent with the 

requirements of the Exchange Act and 

the rules and regulations thereunder 

applicable to a national securities 

exchange, and in particular, with 

section 6(b) of the Exchange Act. 

As discussed further below, because 

the Commission has determined that the 

Exchange-affiliated OEMS Silexx is a 

facility of the Exchange, the terms on 

which it is offered to market 

participants are ‘‘rules of an exchange,’’ 

subject to the rule filing requirement 

under section 19(b) of the Exchange 

Act.49 Because the Exchange proposes a 

rule that improperly would remove the 

Exchange-affiliated OEMS Silexx from 

the statutory rule filing requirement, the 

Commission cannot conclude that the 

proposed rule is consistent with the Act, 

and in particular, with section 6(b) of 

the Act.50

C. Exchange-Affiliated OEMSs as 

Facilities 

Cboe is proposing a rule change that 

would have the effect of interpreting 

section 3(a)(2) of the Act to place certain 

Exchange-affiliated OEMSs outside the 

statutory definition of facility.51 The 

Commission received several comments 

stating that an Exchange-affiliated 

OEMS is within the statutory definition 

of a ‘‘facility’’ of an ‘‘exchange,’’ and 

opposing Cboe’s proposal.52

One commenter states that the 

definition of a ‘‘facility’’ is a key pillar 

of the Commission’s regulatory 

framework and a vital component in 


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53See Bloomberg Letter I at 3 (stating the services 

provided by Silexx (i.e., allowing users to enter and 

route order to trade securities) fall under the 

‘‘facility’’ definition). See also Bloomberg Letter III 

at 3, 4. 

54See Bloomberg Letter I at 6. 

55See Bloomberg Letter I at 2–3. 

56Bloomberg Letter II at 2–3. 

57See Bloomberg Letter II at 5. 

58See SIFMA Letter I at 4. See also McKay 

Brothers Letter at 2. 

59See Securities Exchange Act Release No. 76127 

(Oct. 9, 2015), 80 FR 62584, 62586, n.9 (Oct. 16, 

2015) (SR–NYSE–2015–36) (Order Approving 

Proposed Rule Change amending Section 907.00 of 

the Listed Company Manual). In addition, the 

Commission has found that where a system of 

communication occupies a ‘‘special position’’ with 

respect to the exchange, such that it is ‘‘uniquely 

linked to and endorsed by’’ that exchange to 

provide such function, then that function will 

constitute a ‘‘facility’’ under the Act. See, e.g., 

Securities Exchange Act Release No. 44983 (Oct. 25, 

2001), 66 FR 55225 (Nov. 1, 2001) (‘‘PCX Order’’) 

(considering the introducing broker function, order 

routing function, and electronic communications 

network (‘‘ECN’’) for trading securities ineligible for 

trading on ArcaEx provided by Wave, a brokerdealer in which the PCX exchange had an indirect 

ownership interest and that was affiliated with 

PCX’s ArcaEx electronic trading facility, and 

determining that the optional order-routing 

functionality was a facility of PCX, but the 

introducing broker and ECN functions were not). 

See also Securities Exchange Act Release No. 63241 

(Nov. 3, 2010), 75 FR 69792 (Nov. 15, 2010) (stating 

that, in general, the outbound order routing service 

provided to exchanges by broker-dealers is 

regulated as a facility of the exchange); 90209 (Oct. 

15, 2020), 85 FR 67044 (Oct. 21, 2020) (concluding 

that certain wireless connections are facilities 

because they represent premises and property of the 

exchanges). But compare Securities Exchange Act 

Release No. 44201 (Apr. 18, 2001), 66 FR 21025, 

21029 (Apr. 26, 2001) (File No. 79–9) (Order 

Granting Application for a Conditional Exemption 

by the National Association of Securities Dealers, 

Inc. Relating to the Acquisition and Operation of a 

Software Development Company by the Nasdaq 

Stock Market, Inc.). 

60See ICE, et al. v. SEC, 23 F.4th 1013. 

61See id. at 1022–1024. 

62See Securities Exchange Act Release No. 90209 

(October 15, 2020), 85 FR 67044, 67049 (October 21, 

2020) (SR–NYSE–2020–05, SR–NYSEAMER–2020– 

05, SR–NYSEARCA–2020–08, SR–NYSECHX– 

2020–02, SR–NYSENAT–2020–03, SR–NYSE– 

2020–11, SR–NYSEAMER–2020–10, SR– 

NYSEArca–2020–15, SR–NYSECHX–2020–05, SR– 

NYSENAT–2020–08) (Order Granting Accelerated 

Approval to Establish a Wireless Fee Schedule 

Setting Forth Available Wireless Bandwidth 

Connections and Wireless Market Data 

Connections) (‘‘Wireless Approval Order’’). 

63See ICE, et al. v. SEC, 23 F.4th 1013, at 1022– 

1024. 

64Specifically, and as discussed further below, 

the Court found that each wireless connectivity 

service was within the definition of ‘‘facility’’ in 

section 3(a)(2) of the Act; and, further, the Court 

agreed with the Commission that IDS and the NYSE 

Exchanges form a ‘‘group of persons’’ that together 

‘‘maintains or provides a market place or facilities,’’ 

rendering the wireless connectivity services to be 

within the definition of an ‘‘exchange’’ in section 

3(a)(1) of the Act. See ICE, et al. v. SEC, 23 F.4th 

1013, at 1022–1024. 

65 15 U.S.C. 78c(a)(2). 66 15 U.S.C. 78c(a)(1). 67 Id. 68 ICE, et al. v. SEC, 23 F.4th 1013, at 1022. 69 Id. In the ICE matter, there were two types of 

wireless connections under consideration: (i) 

Continued 

setting the Commission’s scope of 

authority over exchanges.53 The 

commenter states that the proposal falls 

squarely within a history of the 

exchanges’ efforts to limit the 

Commission’s authority to oversee core 

exchange functions 54 and that this 

proposal, if approved, would redefine 

the well-established definitions of a 

‘‘facility’’ and ‘‘exchange’’ that were 

recently affirmed by the D.C. Circuit.55

The commenter further states that the 

Exchange essentially seeks to ‘‘re-define 

‘facility’ in a manner that removes these 

Exchange-affiliated OEMSs from the 

ambit of ‘facility,’ ’’ 56 and that 

exchanges cannot effectively ‘‘exempt 

themselves’’ out of the statutory 

definition, as doing so would ‘‘change 

the contours of the statute’’ with broad 

implications.57 Another commenter 

states that ‘‘allowing exchanges to craft 

rules to adopt overly narrow 

interpretations of what constitutes an 

exchange facility would enable 

exchanges to shift functionality that has 

traditionally been considered part of the 

exchange outside of the exchange and 

beyond the Commission’s oversight.’’ 58

Whether a service or other product is 

a facility of an exchange requires an 

analysis of the particular facts and 

circumstances,59 and the D.C. Circuit’s 

ICE Decision provides a recent example 

of this analysis.60

In the ICE Decision, the D.C. Circuit, 

reviewing a Commission order, 

analyzed whether a service or property 

provided by a corporate affiliate of a 

registered national securities exchange 

was a facility of that exchange subject to 

the rule filing requirements of section 

19(b) of the Act.61 Consistent with the 

Commission’s analysis of the facts in 

that order,62 the D.C. Circuit assessed 

whether an exchange-affiliate’s service 

offering was: (1) a service or property 

that falls within the definition of 

‘‘facility’’ in section 3(a)(2) of the Act; 

and (2) the type of facility that is part 

of the definition of ‘‘exchange’’ in 

section 3(a)(1) of the Act (i.e., a market 

facility).63 The D.C. Circuit found two 

types of wireless connectivity services 

offered by three data service affiliates 

(‘‘IDS’’) of the New York Stock 

Exchange LLC, and its affiliated 

registered national securities exchanges 

(collectively, the ‘‘NYSE Exchanges’’ or 

‘‘NYSE’’) to be facilities of the NYSE 

Exchanges.64

Statutory Analysis 

As stated above, section 3(a)(2) of the 

Act provides that the term ‘‘facility’’ 

when used with respect to an exchange 

includes its premises, tangible or 

intangible property whether on the 

premises or not, any right to the use of 

such premises or property or any service 

thereof for the purpose of effecting or 

reporting a transaction on an exchange 

(including, among other things, any 

system of communication to or from the 

exchange, by ticker or otherwise, 

maintained by or with the consent of the 

exchange), and any right of the 

exchange to the use of any property or 

service.65

Section 3(a)(1) defines an ‘‘exchange’’ 

as ‘‘any organization, association, or 

group of persons . . . which constitutes, 

maintains, or provides a market place or 

facilities for bringing together 

purchasers and sellers of securities or 

for otherwise performing with respect to 

securities the functions commonly 

performed by a stock exchange.’’ 66 The 

statute then specifically provides that an 

exchange ‘‘includes . . . the market 

facilities maintained by such 

exchange.’’ 67

Consistent with the text of the statute 

and the ICE Decision interpreting that 

text, an OEMS owned or operated by a 

national securities exchange or its 

affiliate is a facility of an exchange 

within the meaning of section 3 of the 

Act when it enables users to enter or 

route orders to the exchange for 

execution or receive market data from 

the exchange. This is because the OEMS 

is a ‘‘system of communication to or 

from the exchange . . . maintained by 

or with the consent of the exchange’’ 

offered ‘‘for the purpose of effecting or 

reporting a transaction’’ on the 

exchange. A national securities 

exchange and its affiliated OEMS 

provider, when the OEMS enables users 

to enter or route orders to the exchange 

for execution or receive market data 

from the exchange, together constitute a 

‘‘group of persons’’ that ‘‘maintains, or 

provides a market place or facilities for 

bringing together purchasers and sellers 

of securities. . . .’’ 

In the ICE Decision, the D.C. Circuit 

first considered whether wireless 

connectivity services offered by a 

corporate affiliate of the NYSE 

Exchanges satisfied the definition of 

facility, and concluded that such 

services are ‘‘facilities of an exchange’’ 

because they are ‘‘system[s] of 

communication to or from the exchange 

. . . maintained by or with the consent 

of the exchange’’ offered ‘‘for the 

purpose of effecting or reporting 

transactions on the exchange.’’ 68 In 

particular, the Court stated that the 

statutory definition of facility describes 

the Wireless Bandwidth Connections 

‘‘to a tee,’’ 69 as they ‘‘allow[] a market 


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bandwidth connections (‘‘Wireless Bandwidth 

Connections’’) that enable market participants to 

send trading orders and relay market data between 

their equipment in the Mahwah data center and 

third party data centers; and (ii) market data 

connections (‘‘Wireless Market Data Connections’’) 

that enable market participants in a third party data 

center to receive connectivity to certain proprietary 

market data feeds from one or more of the NYSE 

Exchanges. See id. at 1018. 

70 Id. at 1022. 

71See id. 

72 Id. 

73 Id. 

74 Id. at 1023. Regarding ‘‘system of 

communication’’ and ‘‘for the purpose of effecting 

or reporting transactions,’’ see text accompanying 

supra notes 68–69 (summarizing why the D.C. 

Circuit concluded that the definition of facility 

described the Wireless Bandwidth Connection ‘‘to 

a tee.’’). See also text accompanying infra notes 76– 

77. 

75 Id. at 1024. 

76See Notice, 89 FR 15907. 

77See Notice, 89 FR 15907, 15909. See also e.g., 

Cboe | Silexx, FAQ, https://help.silexx.com/faq 

(‘‘SILEXX OEMS Obsidian API offers a complete 

solution for data and execution services for a low 

monthly fee. This allows traders to maintain full 

control of their proprietary strategy, while giving 

them full access to market data and execution.’’) 

(last visited Oct. 30, 2024). 

78See Letter from Laura G. Dickman, Vice 

President, Associate General Counsel, Cboe Global 

Markets, Inc., to Vanessa Countryman, Secretary, 

Securities and Exchange Commission (Sept. 3, 

2024) (‘‘Exchange Response II’’) at 7. 

79Rule 3b–16, 17 CFR 240.3b–16(b) (emphasis 

added). 

80See ICE, et al. v. SEC, 23 F.4th 1013, at 1027. 

See also SIFMA Letter II at 3 (stating that any 

analysis under section 3(a)(1) and Rule 3b–16 

requires a review of the relationships among the 

‘‘organization, association, or group of persons’’ 

involved to determine whether, acting together, 

they ‘‘constitute, maintain, or provide’’ a service 

that facilitates securities transactions or the 

communication of market data). 

81See ICE, et al. v. SEC, 23 F.4th 1013, at 1027. 

82See ICE, et al. v. SEC, 23 F.4th 1013, at 1024– 

25. 

83Cboe Silexx: Global markets at your fingertips, 

https://www.cboe.com/services/silexx/ (last visited 

Oct. 1, 2024). 

participant to transmit data, including 

price quotes and orders, between the 

participant’s co-located equipment at 

the Mahwah data center and the 

participant’s co-located equipment at a 

third-party data center, and thus to 

effect or report transactions on the 

[NYSE] Exchanges.’’ 70 The Court 

focused on the purpose of the service, 

unpersuaded by the NYSE Exchanges’ 

view that it was meaningful that the 

service was offered separately from 

other services needed to access the 

matching engine.71 Specifically, it was 

not important that the connections ran 

between NYSE’s Mahwah data center 

and a third-party data center, or that the 

connections did not connect a market 

participant’s equipment directly to the 

NYSE Exchanges’ matching engines.72

Considering the statutory language in 

section 3(a)(2) of the Act, which 

provides that a facility is ‘‘for the 

purpose of effecting or reporting a 

transaction on an exchange’’ and 

includes ‘‘any system of communication 

to or from the exchange . . . maintained 

by or with the consent of the exchange,’’ 

the D.C. Circuit focused on ‘‘system of 

communication,’’ ‘‘consent of the 

exchange’’ and ‘‘for the purpose of 

effecting or reporting transactions.’’ 73

Regarding ‘‘consent of the exchange,’’ 

the Court reasoned that because the 

wireless connectivity services were 

offered by an affiliate of the NYSE 

Exchanges, these services, ‘‘could not 

exist without the consent of the [NYSE] 

Exchanges.’’ 74

Next, the D.C. Circuit considered 

whether the subject wireless 

connectivity services were ‘‘the type of 

facility’’ that section 3(a)(1) of the 

Exchange Act includes in the definition 

of ‘‘exchange.’’ Even though the wireless 

connections were provided and 

maintained by a corporate affiliate of the 

NYSE Exchanges (IDS), and not by the 

NYSE Exchanges themselves, the Court 

observed that IDS and the NYSE 

Exchanges are ‘‘closely connected 

corporate affiliates’’ and ‘‘certainly’’ 

were a ‘‘group of persons’’ that together 

‘‘maintains or provides a market place 

or facilities.’’ 75

Using the framework from the ICE 

Decision, we consider whether the 

Exchange-affiliated OEMS Silexx is a 

facility of Cboe based on the facts 

presented and conclude that it is. As an 

OEMS offered by a corporate affiliate of 

Cboe, Silexx allows a market participant 

to ‘‘create orders, route them for 

execution, and input parameters to 

control the size, timing, and other 

variables of their trades.’’ 76 Market 

participants may use Silexx to, among 

other things, enter and route orders to 

Cboe and other exchanges, as well as 

access and transmit exchange and 

market data.77 Silexx therefore provides 

functionality that is for the purpose of 

‘‘effecting or reporting’’ transactions in 

securities on Cboe. The fact that the 

OEMS can also be used for the purpose 

of effecting or reporting transactions on 

other exchanges does not change this 

outcome. Therefore, Silexx is a system 

of communication, maintained by or 

with the consent of an exchange, 

namely Cboe, which can be used for the 

purpose of effecting or reporting a 

transaction on Cboe. It fits squarely 

within the definition of a facility. 

The Exchange states that Rule 3b–16, 

which further defines the statutory 

definition of ‘‘exchange,’’ contains an 

express exemption for ‘‘activities’’ that 

should not be considered exchange 

functions (and therefore should not be 

deemed to be facilities), including for 

‘‘rout[ing] orders to a national securities 

exchange.’’ 78 Contrary to the 

Exchange’s view that an Exchangeaffiliated OEMS such as Silexx is not a 

facility since it only routes orders and 

therefore falls under Rule 3b–16’s 

exception, Rule 3b–16 states that an 

‘‘organization, association, or group of 

persons shall not be considered to 

constitute, maintain, or provide ‘a 

market place or facilities for bringing 

together purchasers and sellers of 

securities or for otherwise performing 

with respect to securities the functions 

commonly performed by a stock 

exchange,’ solely because,’’ inter alia, it 

‘‘[r]outes orders to a national securities 

exchange, a market operated by a 

national securities association, or a 

broker-dealer for execution.’’ 79

The qualifier ‘‘solely because’’ means 

that engaging in order routing is not by 

itself sufficient to render a service 

provider an exchange. As the D.C. 

Circuit observed, ‘‘[where services] are 

included in the statutory definition of 

exchange because they are part of a 

group of persons that together perform 

and facilitate exchange functions going 

far beyond merely routing orders . . ., 

[it is not required that] every part of an 

exchange, nor every person that is part 

of a group that constitutes an exchange, 

must have all [the characteristics of] an 

exchange.’’ 80 The Court stated further, 

‘‘[t]hat the Wireless Connections lack 

[all] these characteristics, therefore, 

does not preclude their being regulated 

as part of an exchange.’’ 81 Further, 

while the NYSE Exchanges suggested to 

the D.C. Circuit that the Commission’s 

position could lead to a result in which 

all property of and services provided by 

any corporate affiliate of a registered 

exchange are facilities because of 

affiliation with a registered exchange, 

the D.C. Circuit rejected this concern, 

instead finding that the closely 

connected corporate affiliates’ activities 

were the relevant consideration.82 In 

this case, there similarly can be closely 

connected activity between the 

Exchange-affiliated OEMS Silexx and 

Cboe. As discussed below, the Cboe 

group markets Silexx to its market 

participants (i.e., traders) as a data and 

access system, describing it as a system 

to ‘‘easily trade equities, options, 

futures, and options on futures from a 

single platform—giving you speed to 

market with powerful order-entry 

tools.’’ 83 Accordingly, Cboe itself 

describes Silexx as providing more than 

solely order routing. As a result, Cboe 

cannot avail itself of Rule 3b–16’s order 


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84Notice, 89 FR 15909. ‘‘[T]he Exchange proposes 

to adopt Rule 3.66 to provide that an OEMS 

platform operated in a manner independent from 

the Exchange despite affiliation with the Exchange 

will not be deemed a facility of the Exchange.’’ Id. 

85Herein, the term ‘‘Rule 3.66’’ OEMS refers to an 

‘‘Exchange-affiliated OEMS’’ that meets the 

proposed Rule 3.66 conditions. 

86See Notice, 89 FR 15910. 

87 Id. 

88See Notice, 89 FR 15911; See Letter from Laura 

G. Dickman, Vice President, Associate General 

Counsel, Cboe Global Markets, Inc., to Vanessa 

Countryman, Secretary, Securities and Exchange 

Commission (Apr. 19, 2024) (‘‘Exchange Response 

I’’) at 4–6. 

89See Wireless Approval Order, supra note 62, 85 

FR 67044 at n.23 (citing the notice of NYSE’s 

proposal in which NYSE described the Wireless 

Bandwidth Connection as part of a chain of 

connections: ‘‘At either end of a Wireless 

Bandwidth Connection, a market participant uses a 

cross connect or other cable to connect its 

equipment to the wireless equipment in the 

Mahwah Data Center and Third Party Data Center. 

Cross connects in the Mahwah Data Center lead to 

the market participant’s server in co-location, [and 

from there to the trading and execution systems of 

the NYSE Exchanges]’’). 

90See ICE, et al. v. SEC, 23 F.4th 1013 at 1023– 

1024. 

91Bloomberg Letter IV at 7 (observing ‘‘the 

universal adoption of Silexx among Cboe TPHs.’’). 

92See SIFMA Letter II at 3. See also SIFMA Letter 

I at 3 (‘‘[T]he Exchange argues that an affiliated 

OEMS is not a facility . . . by focusing on whether 

there is a direct technological connection between 

the affiliated OEMS and the Exchange’s ‘core 

trading system’ and downplaying an affiliated 

OEMS’s importance in the overall chain of 

connection to an exchange.’’) See SIFMA Letter I at 

3. 

93See also SIFMA Letter I at 5 (stating (i) the 

Exchange and affiliated OEMSs (such as Silexx) are 

closely connected by virtue of their ownership by 

the same parent company; (ii) the facts and 

circumstances indicate that ‘‘affiliated OEMSs have 

the ability to function as ‘systems of 

communication’ to or from the Exchange ‘for the 

purpose of effecting or reporting a transaction’ on 

the Exchange’’ (satisfying section 3(a)(2)); (iii) this 

makes clear that the Exchange and affiliated OEMSs 

constitute a ‘‘group of persons’’ (within the meaning 

of section 3(a)(1)). 

94 It should be noted that ‘‘The Option Chain is 

the most widely utilized module within the SILEXX 

OEMS Platform.’’ Cboe | Silexx, Option Chain, 

https://help.silexx.com/modules/option-chain (last 

visited Oct. 27, 2024). Meanwhile, ‘‘Cboe is the 

largest U.S. options market operator’’ according to 

Cboe. Cboe U.S. Options, https://www.cboe.com/ 

market_data_services/us/options/ (last visited Oct. 

27, 2024). 

95See Notice, 89 FR 15910. 

96See supra note 94. 

97See Notice, 89 FR 15911. 

98 ICE, et al. v. SEC, 23 F.4th 1013, at 1024. 

99 ICE, et al. v. SEC, 23 F.4th 1013, at 1025 

(emphasis in original). 

routing exception to claim that Silexx is 

not a facility under the Exchange Act. 

Proposed Rule 3.66 Fails To Ensure 

That the Exchange and ExchangeAffiliated OEMS are Separate 

Businesses That Operate in a Manner 

Independent From One Another 

Cboe maintains that proposed Rule 

3.66, if approved, would alter the 

section 3 analysis because its 

requirements would establish sufficient 

separation between the Exchangeaffiliated OEMS and Cboe, and that it 

would render the businesses 

‘‘independent’’ from one another.84

According to Cboe, because of the Rule 

3.66 conditions, an Exchange-affiliated 

OEMS provider would not be part of the 

group of persons providing an exchange 

(and therefore the OEMS would not be 

a facility). As described further below, 

with reference to the ICE Decision, Rule 

3.66 fails to achieve its purported goal 

of ensuring that the Exchange and 

Exchange-affiliated OEMS are separate 

businesses that operate in a manner 

independent from one another. 

In the Notice, Cboe states that in the 

case of a ‘‘Rule 3.66 OEMS,’’ 85 Cboe 

would not have any right to use a Rule 

3.66 OEMS for the purpose of effecting 

or reporting a transaction on an 

exchange; nor would a Rule 3.66 OEMS 

be a system of communication to or 

from Cboe maintained by or with the 

consent of the Cboe.86 In support of 

these views, Cboe states that use of a 

Rule 3.66 OEMS for purposes of 

effecting or reporting a transaction on 

Cboe is solely within the discretion of 

the OEMS user, and the OEMS offers a 

non-exclusive means to access the 

Exchange.87 Cboe states that the need 

for a TPH to purchase a port to connect 

the Exchange-affiliated OEMS to the 

Exchange’s core trading system delinks 

the OEMS and the Exchange core 

trading system and therefore the OEMS 

is not a system of communication to or 

from the Exchange maintained by or 

with the consent of the Exchange.88

These arguments are not persuasive for 

the same reason that the D.C. Circuit 

rejected similar arguments in the ICE 

Decision. For instance, the Wireless 

Bandwidth Connection was 

characterized by NYSE and IDS as 

optional, as not providing exclusive 

access to any exchange, and as a system 

solely within the discretion of a market 

participant choosing to connect its 

equipment in two data centers.89 Yet, 

the D.C. Circuit determined that the 

connection was an important link (in 

fact, a ‘‘vital and proximate link’’) in a 

chain to the NYSE matching engines 

and that this was the case though a 

market participant would require 

additional connections from a NYSE 

Exchange in order to access the 

matching engine.90 Similarly, a Rule 

3.66 OEMS such as Silexx would 

provide to its users a vital and 

proximate link in a chain to the Cboe 

matching engine 91 even though a 

market participant would require ports 

from Cboe to access the matching engine 

and could use alternatives to do so. 

Several commenters state that Cboe’s 

arguments about delinking are not 

persuasive. As one commenter states, a 

direct connection to an exchange is not 

required by the definitions in sections 

3(a)(1) or (a)(2).92 We agree. Rather, 

what matters is whether market 

participants purchasing the services of 

an Exchange-affiliated OEMS are doing 

so for the purpose of creating orders that 

will be entered or routed to exchanges, 

including the Exchange, for execution, 

and for receiving market data from the 

Exchange, even if they also trade 

elsewhere.93 While Cboe characterizes 

an OEMS as having a range of uses, it 

downplays Silexx’s role as a system to 

create and route orders to and access 

liquidity on Cboe and other exchanges, 

particularly options exchanges.94 While 

Cboe rejects the idea that Silexx has 

been and will be used as a system of 

communication,95 as already discussed, 

its functions include the routing of 

orders and providing access to liquidity 

on Cboe.96

Cboe states that even if provided 

directly by the Exchange (as opposed to 

an exchange affiliate or contractor), an 

OEMS would not be a facility if an 

OEMS and an Exchange port are 

independently maintained and operated 

systems.97 As already discussed, NYSE 

argued that IDS was independent of the 

NYSE Exchanges to no avail. The D.C. 

Circuit determined that the ‘‘closely 

connected corporate affiliates’’ were a 

group of persons within the meaning of 

the definition of exchange in section 

3(a)(1) of the Act; 98 and that IDS was 

part of a group that directly brings 

together purchasers and sellers of 

securities, and was offering services in 

the form of a system of communication 

(wireless connections) for the purpose 

of bringing together purchasers and 

sellers of securities.99 The provision of 

a system of communication by an 

affiliate for the purpose of bringing 

together purchasers and sellers of 

securities on the NYSE Exchanges (and 

elsewhere) was sufficient to satisfy the 

statutory definition of ‘‘facility’’ of an 

‘‘exchange.’’ Cboe attempts to 

distinguish OEMSs and thereby avoid a 

similar conclusion. But its arguments 

are not persuasive. 

First, Cboe seeks to distinguish an 

OEMS from wireless connections like 

those at issue in the ICE Decision, 

stating that ‘‘an OEMS platform is a 

software tool that allows users to 

manage trading activity, but does not on 

its own provide a user the ability to 

transmit information (including orders) 


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100Exchange Response II at 3. 

101 Id. at 4. 

102Cboe Silexx: Global markets at your fingertips, 

https://www.cboe.com/services/silexx/ (last visited 

Oct. 1, 2024). 

103See, e.g., Bloomberg Letter I at 6–7; Bloomberg 

Letter II at 6; SIFMA Letter I at 3. 

104See Exchange Response II at 12 (discussing the 

PCX Order establishing the Archipelago Exchange 

trading facility). See id. at 12–15. 

105See supra note 59 (discussing the PCX Order 

and outbound router examples). 

106See SIFMA Letter II at 5 (stating that the PCX 

Order is distinguishable because an affiliated OEMS 

does not function in a manner similar to an 

introducing broker providing sponsored access to 

an exchange which did not ‘‘route’’ orders but 

merely allowed sponsored non-members to 

electronically connect to exchange trading facility 

ArcaEx to enter their own orders through brokerdealer Wave’s membership in the exchange, 

whereas affiliated OEMS’s functions are more akin 

to Wave’s optional order routing function, which 

the Commission found to be an exchange facility.) 

107See Exchange Response I at 4; See also 

Exchange Response II at 13–15. The Exchange 

discusses two separate Nasdaq proposed rule 

changes where Nasdaq proposed to remove from its 

rulebook references to fees charged for index and 

ETF values disseminated through its index 

dissemination service and where Nasdaq proposed 

to delete references to its ACES communication 

system from its rulebook. 

108See generally Securities Exchange Act Release 

No. 56237 (Aug. 9, 2007), 72 FR 46118 (Aug. 16, 

2007) (SR–NASDAQ–2007–043). 

109See Exchange Response II at 14 (quoting from 

Securities Exchange Act Release No. 58897 (Nov 3, 

2008), 73 FR 66952 (Nov. 12, 2008) (SR–NASDAQ– 

2007–018). 

110Exchange Response II at 8. The Exchange 

states that the proposed Rule 3.66 guardrails 

operate to take the Cboe affiliate outside the Act’s 

‘‘group of persons’’ provision—which is the only 

possible basis for regulating OEMSs as an exchange 

facility. Id. 

111Bloomberg Letter II at 12–13. See also 

Bloomberg Letter III at 4–5 (adding that 

independence from the Exchange at an operational 

level ‘‘cannot be a basis for simply excluding the 

facility from oversight entirely’’). The commenter 

went on to state that the affiliation with the 

corporate group that operates the exchange 

‘‘provides ample incentive and opportunity for the 

exchange to exploit the OEMS unfairly to its 

benefit, and the detriment of investors.’’ Bloomberg 

Letter III at 5. 

112Exchange Response II at 11. 

113See ICE, et al. v. SEC, 23 F.4th 1013, at 1024. 

114See Exchange Response II at 11–12. 

115See Exchange Response II at 8–9. 

to or from an exchange.’’ 100 According 

to Cboe, an OEMS is ‘‘fundamentally 

different from transmission facilities 

that connect to or near an exchange, 

such as the wireless services at issue in 

[the D.C. Circuit decision]. . . .’’ 101

While an OEMS is not the same as a 

wireless connection, it is comparable in 

terms of how it fits within the statutory 

definition of facility. As previously 

stated, Cboe markets Silexx as a data 

and access system to ‘‘easily trade 

equities, options, futures, and options 

on futures from a single platform— 

giving you speed to market with 

powerful order-entry tools.’’ 102 Like a 

wireless connection, an OEMS is a 

system of communication that requires 

a market participant to make other 

purchases of equipment and services to 

reach an exchange’s matching engine. 

Neither a Wireless Bandwidth 

Connection, a Wireless Market Data 

connection, nor an OEMS is sufficient 

on its own to enable a market 

participant to conduct trading on an 

exchange. What each has in common, 

however, is that it exists to enable 

market participants to enter and route 

orders to trade securities efficiently on 

a variety of U.S. exchanges, including 

the affiliated exchange. In short, while 

the Exchange-affiliated OEMS has 

multiple uses, one of those uses is 

‘‘effecting or reporting transactions’’ on 

Cboe, which places it within the 

definition of a facility.103

Second, the Exchange states that its 

proposal is supported by Commission 

precedent. The Exchange points to the 

PCX Order in which ‘‘the Commission 

. . . recognized a national securities 

exchange’s affiliation with an entity 

providing services related to the 

exchange does not necessarily equate to 

the affiliate being deemed a facility of 

the exchange.’’ 104 While it is correct 

that not every affiliate providing 

exchange-related services has been 

determined to be a facility of that 

exchange, affiliates providing routing 

services (which enable market 

participants to enter and route orders to 

trade securities efficiently on a variety 

of U.S. exchanges) routinely have.105 As 

explained further by a commenter, 

Cboe’s reliance on the PCX Order is 

misplaced because an affiliated OEMS’s 

functions are more akin to an optional 

order routing function—which was 

determined to be an exchange facility, 

than to an introducing brokerfunction—which was determined not to 

be an exchange facility.106

The Exchange also points to two 

examples where the Commission 

determined that services offered by the 

Nasdaq Stock Market (‘‘Nasdaq’’) were 

not facilities of an exchange because 

they were not providing an exchange 

function.107 With respect to Nasdaq 

ACES, that system was designed to 

permit the routing of orders to a brokerdealer for handling consistent with that 

broker-dealer’s best execution and other 

regulatory obligations; it was not 

designed to enable access to the 

exchange.108 In contrast, Silexx is 

designed to enable users to enter or 

route orders to the Exchange for 

execution or receive market data from 

the Exchange, even though that may not 

be its only use. With respect to Nasdaq’s 

index dissemination service, Cboe 

focuses on the Commission’s statement 

that if Nasdaq were to ‘‘tie pricing’’ of 

the service to Nasdaq exchange services, 

or condition a company’s inclusion in 

an index on a Nasdaq listing, then the 

index dissemination service would 

become a Nasdaq facility.109 However, 

the Commission did not say the inverse, 

that for a service to be a facility, there 

must be a pricing or some other explicit 

linkage to the exchange. As discussed 

above, the particular facts and 

circumstances are key. Like a wireless 

connection, the services provided by an 

OEMS are purchased for the purpose of 

effecting transactions on exchanges, 

including Cboe. 

Proposed Rule 3.66 Fails To Achieve it 

Purported Goal Because Its Conditions 

Are Insufficient To Establish 

Independence 

Cboe states that Rule 3.66 would 

provide for the independence of the 

OEMS from the Exchange.110 One 

commenter states ‘‘[t]he Exchange’s 

central factual argument[,] that the 

exchange-owned OEMSs are 

independently operated from the 

interests and control of the Exchange 

appears to be without merit and 

contrary to the facts provided in the 

proposal.’’ 111 We agree. 

Cboe states that in the ICE Decision 

whether there is a ‘‘ ‘unity of interests’ 

was perhaps the key statutory 

criterion.’’ 112 More specifically, Cboe 

states that its proposal is consistent with 

the following statement in the ICE 

Decision: ‘‘[O]ne corporation that is 

affiliated with but not controlled by 

another may or may not, depending 

upon the circumstances, be considered 

a ‘group of persons’ for the purposes of 

the statute.’’ 113 According to Cboe, Rule 

3.66 would establish ‘‘concrete, 

enforceable structural separations 

between Cboe and any affiliated OEMS 

(including Silexx) that are designed to 

prevent anticompetitive conduct’’ and 

would ‘‘render[ ] the D.C. Circuit’s 

statement about ‘closely connected 

corporate affiliates’ inapplicable 

here.’’ 114 Cboe states that because the 

proposed Rule 3.66 conditions would 

establish that the Exchange and 

affiliated OEMS are not ‘‘closely 

connected corporate affiliates,’’ they are 

not a ‘‘group of persons’’ within the 

meaning of section 3(a)(1) of the Act.115

After careful consideration, including 

consideration of the comments received, 

proposed Rule 3.66 fails at its purported 

goal of establishing the independence of 

an affiliated OEMS from the Exchange 

business. 

The stated purpose of proposed Rule 

3.66 is ‘‘to provide that [the ExchangeVerDate Sep<11>2014 16:22 Nov 05, 2024 Jkt 265001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\06NON1.SGM 06NON1

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116Notice, 89 FR 15909. 

117 Id. 

118See Securities Exchange Act Release No. 

87727 (Dec. 12, 2019), 84 FR 69428, 69439 (Dec. 18, 

2019). 

119Notice, 89 FR 15908, n.13. 

120We do not find compelling the Exchange’s 

argument that the Exchange-affiliated OEMS 

operate at a competitive disadvantage. First, the 

Exchange has been submitting rule filings for 

several years, and it has not demonstrated that its 

affiliated OEMS has been disadvantaged compared 

to unaffiliated OEMSs that operate in the same 

market. See Notice, 89 FR 15907, n.4–5. Second, the 

Exchange provided no information that would 

indicate that its efforts to mitigate this concern 

through the Exchange’s Silexx user logical port fee 

waiver is inadequate. Id. at n.13. Finally, the 

Exchange did not demonstrate that a burden on 

competition on a ‘‘facility’’ or unregulated affiliate 

is a material consideration under section 6(b) of the 

Act. A commenter opines that ‘‘nothing in Section 

6 of the Exchange Act contemplates that exchange 

rules should address competition between 

unregistered and unregulated entities such as 

OEMSs.’’ SIFMA Letter II at 7. Moreover, as the D.C. 

Circuit states in the ICE Decision: ‘‘The SEC is not 

tasked with deciding whether subjecting an 

organization to the rule-approval process would 

burden its ability to compete. That decision was 

made by the Congress [and b]ecause the Wireless 

Connections satisfy the statutory definitions in 

Sections 3(a) and (b), its rules must be filed with 

and approved by the SEC—full stop.’’ ICE, et al. v. 

SEC, 23 F.4th 1013, at 1026. 

121See Exchange Response II at 13, n.78. It 

appears the Exchange changed its position on the 

Silexx fee waiver during the course of the 

proceedings related to the proposal. In the proposal, 

the Exchange concedes that ‘‘the ability to provide 

this pricing may demonstrate that the Exchange’s 

ability to act with Cboe Silexx,’’ but because it was 

subject to section 19(b) rule filing it would be 

permissible, i.e., ‘‘if the Exchange adopted 

procedures and internal controls in accordance 

with proposed Rule 3.66, those barriers would 

prevent Cboe Silexx [sic] or any other Exchangeaffiliated OEMS [sic] to adopt such fees without 

submission of a rule filing.’’ Notice, 89 FR 15908, 

n.13. Meanwhile, in its second comment letter, the 

Exchange indicates that it ‘‘intends to continue to 

operate the on-floor version of Silexx as a facility 

of the exchange’’ if the proposal is approved 

without any proposed rule text mentioning, let 

alone distinguishing between, the on-floor and offfloor Silexx versions. See Exchange Response II at 

11, n.63. 

122A commenter observed the Exchange’s 

changing positions on the Silexx fee waiver 

represents a ‘‘materially different application of the 

original Proposal and a distinction that has not been 

fully articulated or explained’’ in the proposal. 

Bloomberg Letter IV at 3. If the Exchange’s intention 

is to change its position, we agree with the 

commenter that the Exchange failed to meet its 

burden to provide a proposed rule change 

‘‘sufficiently detailed and specific to support an 

affirmative Commission finding.’’ Id. (citing 17 CFR 

201.700(b)(3)(i)). 

123See Exchange Response II at 13, n.78. Notably, 

Cboe states that ‘‘with respect to Silexx, the 

majority of off-floor users are not associated with 

a TPH’’ and are therefore generally not subject to 

logical port fees. See Exchange Response II at 14, 

n.85. 

124See Exchange Response II at 13, n.78. 

125See ICE, et al. v. SEC, 23 F.4th 1013, at 1025. 

In the ICE Decision the D.C. Circuit commented that 

in the case of ‘‘one corporation that is affiliated 

with but not controlled by another’’ these affiliates 

‘‘may or may not, depending upon the 

circumstances, be considered a ‘group of persons’ 

for the purposes of the statute.’’ Id. at 1025. 

‘‘Whether two or more persons are or may be acting 

in concert is likely the key consideration. These, 

however, are possibilities we need not confront in 

the present case.’’ Id. We note that the Exchange’s 

intention to retain a fee waiver to benefit solely onfloor customers it shares with the affiliated OEMS 

is an indication that the proposed rule is not 

designed to prevent further acts in concert of the 

two affiliates’ mutual commercial interests. As 

mentioned above, no other third-party OEMS’ 

customers enjoy a similar waiver from the 

Exchange. 

126Bloomberg Letter IV at 7. See also Bloomberg 

Letter II at 11 (stating, ‘‘[N]ot only do these fee 

waivers undercut the central argument that the 

OEMS service is operating at a competitive 

disadvantage, it also undercuts the entire premise 

of the Proposal—that the OEMS is operated in a 

manner that is independent from the Exchange. 

This fee waiver also raises concerns surrounding 

how the existing fees are not ‘designed to permit 

unfair discrimination’ and ‘not impose any burden 

on competition not necessary or appropriate in 

furtherance of the purposes of the Act.’ ’’). 

127See Exchange Response II at 8. 

128 Id. at 17. 

affiliated] OEMS platform operate[s] in 

a manner independent from the 

Exchange despite affiliation with the 

Exchange.’’ 116 We understand that the 

goal of proposed Rule 3.66 is to 

establish that corporate affiliation 

notwithstanding, if Cboe and an 

affiliated OEMS (e.g., Silexx) comply 

with the proposed rule they could not 

‘‘act in concert,’’ and therefore the 

OEMS would not be a ‘‘facility’’ of Cboe. 

As a result, according to the Exchange, 

an Exchange-affiliated OEMS should be 

able to operate without being subjected 

to Commission oversight, including rule 

filing requirements.117 But proposed 

Rule 3.66 does not establish that an 

affiliated OEMS and the Exchange are 

prevented from acting in concert. 

Historically, there has been a close 

connection in the operation of the 

Exchange and Exchange-affiliated 

OEMSs. For example, since 2019, the 

Exchange has provided for a logical port 

fee waiver for Exchange-affiliated OEMS 

users and has not provided a similar 

waiver for users of other OEMSs. In 

justifying this fee waiver in 2019, the 

Exchange viewed OEMS subscription 

fees as ‘‘inclusive of fees to access the 

exchange.’’ 118 The Exchange has 

traditionally considered the relationship 

it has with customers as inclusive of 

both their use of Exchange and 

Exchange-affiliated OEMS services, 

demonstrating the close connection 

between the affiliates. In its proposal, 

the Exchange offers a new and different 

rationale from that used in its 2019 

filing, but the implication of this 

rationale is the same: the Exchange and 

Exchange-affiliated OEMSs enjoy a close 

connection and work with each other to 

achieve their aligned interests. In the 

proposal, the Exchange explains that the 

fee waiver exists to ‘‘offset’’ the 

‘‘competitive disadvantage’’ of the 

Exchange-affiliated OEMS having to 

comply with section 19(b) rule filing 

requirements.119 In the Exchange’s 

view, disadvantages borne by an 

Exchange-affiliated OEMS can be offset 

by a subsidy in the form of a fee waiver 

borne by the Exchange.120

If, however, the Exchange and OEMS 

operated independently, there would be 

separate and independent relationships 

between the Exchange and its customers 

on the one hand and the Exchangeaffiliated OEMS and its customers on 

the other. In its second comment letter, 

the Exchange has offered to 

‘‘discontinue this fee waiver [for] offfloor Silexx’’,121 because Silexx on-floor 

users, i.e., floor brokers, are utilizing a 

facility of the Exchange while off-floor 

Silexx users are not. The distinction 

between on-floor and off-floor versions 

of the Exchange-affiliated OEMS is not 

explained in the proposed rule 122 and 

the impact of the withdrawal discussed 

in the Exchange’s second response letter 

on the Exchange and the Exchangeaffiliated OEMS and their mutual 

customers appears to be limited.123 This 

retention of the fee waiver for on-floor 

users provides further indication of a 

close connection between the Exchange 

and Silexx. Moreover the Exchange’s 

intention to preserve, at least in large 

part,124 this preferential fee waiver for 

on-floor Silexx customers provides an 

example of how the two entities would 

continue to ‘‘act in concert’’ even if the 

proposed rule were approved.125 The 

impact of the Exchange’s fee waiver has 

been and is likely to remain (if the 

proposed rule is approved) significant 

with one commenter stating this fee 

waiver ‘‘undoubtedly contributed to the 

universal adoption of Silexx among 

Cboe TPHs.’’ 126

The Exchange’s view that the Silexx 

for on-floor users is a facility of the 

Exchange while Silexx for off-floor users 

is not a facility of the Exchange is not 

the only inconsistency in the proposed 

rule. Many of the proposed rule’s 

conditions run counter to its purported 

goal of independence. For example, 

proposed Rule 3.66(b) provides that if a 

TPH using the OEMS establishes a 

direct connection to the Exchange via an 

Exchange port, that connection is 

established in the same manner and in 

accordance with the same terms, 

conditions, and fees as any third-party 

OEMS as set forth in the Exchange’s 

rules, technical specifications, and fees 

schedule.127 Relatedly, proposed Rule 

3.66(g) would provide that a third-party 

not required to register as a national 

securities exchange under section 6 of 

the Act can offer a similar OEMS.128


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129 Id. at 16. 

130See 15 U.S.C. 78f(b)(5). Should this 

differential pricing benefit the Exchange with 

additional trading resulting in increased liquidity 

and fees, this would be an advantage to the 

Exchange resulting from business ties to, or 

enterprise relationship with the Exchange-affiliated 

OEMS. 

131SIFMA Letter II at 4. 

132 Id. at 4–5. 

133Notice, 89 FR 15909 (emphasis added). 

134See 15 U.S.C. 78f(b)(8). For example, as 

written, proposed Rule 3.66 would not preclude the 

Exchange-affiliated OEMS from offering discounts 

on its pricing to incentivize routing of orders to the 

Exchange or prevent the Exchange-affiliated OEMS 

from providing lower fees or rebates for large 

market makers that happen to represent significant 

proportions of Exchange volumes. See generally, 

proposed Rule 3.66. 

135See e.g., Bloomberg Letter II at 13. 

136SIFMA Letter I at 7. 

137SIFMA Letter I at 7. See also Bloomberg Letter 

II at 13 (citing Q2 2019 Earnings Call, CBOE Global 

Markets, Inc. (Aug. 2, 2019) stating, ‘‘Aside from the 

Proposal, the facts on the ground indicate the two 

entities attempt to leverage a competitive advantage 

through their unique relationship. For example, the 

Exchange has stated in the past that Silexx has been 

promoted as the avenue through which people will 

trade certain exchange products and there have 

been efforts to more fully integrate these within the 

operating segments of the overall business.’’). 

138See 15 U.S.C. 78f(b)(5). As such, we cannot 

conclude that the proposed rule is not designed to 

permit unfair discrimination customers, issuers, 

brokers or dealer as required by section 6(b)(5). 

139SIFMA Letter II at 6 (citing 15 U.S.C. 78f(b)(1), 

which requires that a registered exchange have ‘‘the 

capacity to be able to carry out the purposes of [the 

Exchange Act] and to comply, and . . . to enforce 

compliance by its members and persons associated 

with its members, with the provision of [the 

Exchange Act], the rules and regulations 

thereunder, and the rules of the exchange.’’). 

140 15 U.S.C. 78s(b)(2). 

141 15 U.S.C. 78c(a)(1), (a)(2), and 15 U.S.C. 78f(b). 

142 15 U.S.C. 78s(b)(2). 

These provisions fall short of addressing 

how users of a third party OEMS would 

be assured that their access to the 

Exchange is not disadvantaged by 

choosing a third-party OEMS over an 

affiliated OEMS. Additionally, the 

requirement that a third-party OEMS is 

similar would not necessarily mean the 

user of the third party OEMS would not 

be disadvantaged as compared to the 

user of an affiliated OEMS. 

In addition, proposed Rule 3.66(e) 

would require that ‘‘any fees charged to 

a user of the OEMS are unrelated to that 

user’s Exchange activity or to Exchange 

fees set forth on the Exchange’s fees 

schedule.’’ 129 Nothing in this provision 

would preclude an Exchange-affiliated 

OEMS from charging a different price to 

each user, thereby effectively 

establishing different prices to access 

the Exchange, and potentially unfairly 

discriminating against certain users 

without being required to provide any 

justification.130 As one commenter 

states, under the proposed rule, the 

Exchange-affiliated OEMS becomes ‘‘an 

unregulated entity that, among other 

things, can separately negotiate terms 

with each user.’’ 131 The commenter 

observes that as a consequence ‘‘each 

OEMS user would not necessarily be ‘on 

precisely the same terms’ with the 

Exchange as other users and would not 

be protected by Exchange Act ‘standards 

that prohibit denials of access and other 

unfair discrimination against any 

member regarding access to’ Cboe’s 

services.’’ 132

Further, proposed Rule 3.66(h) would 

require that ‘‘the Exchange has 

established and maintains procedures 

and internal controls reasonably 

designed to prevent the OEMS from 

receiving any competitive advantage or 

benefit as a result of its affiliation/ 

relationship with the Exchange, the 

provision of information to the entity or 

personnel operating the OEMS 

regarding updates to the system (such as 

technical specifications) until such 

information is available generally to 

similarly situated market 

participants.’’ 133 However, this 

provision runs in only one direction. It 

does not similarly require that there be 

policies and procedures in place to 

prevent the Exchange from receiving 

any competitive advantage as a result of 

its affiliation/relationship with the 

OEMS thus failing to satisfy the 

requirements of section 6(b) that the 

rules of an exchange not impose a 

burden on competition that is not 

necessary or appropriate.134

Commenters observe that it is not just 

the Exchange-affiliated OEMS that can 

benefit from the affiliation with the 

Exchange, but the Exchange can benefit 

from the affiliation with the OEMS as 

well.135 As one commenter states, 

‘‘Exchange-affiliated OEMSs not subject 

to the SRO rule filing process could 

adopt rules, create new order types, 

raise fees, or implement new or different 

tiers of service to benefit the 

Exchange.’’ 136 The commenter further 

states ‘‘[t]hrough these or other 

mechanisms, the affiliated OEMS and 

the Exchange, together as a group, could 

effectively force market participants, 

including broker-dealers which are 

obligated to obtain best execution for 

customer orders, to purchase and use 

(regardless of the cost or other 

conditions) the Exchange’s affiliated 

OEMS to maintain access to the 

Exchange . . . [s]uch preferential 

treatment or other barriers to accessing 

the Exchange could result in inequitable 

allocations of fees among members, 

impediments to a free and open market 

and national market system, unfair 

discrimination among customers, and 

unnecessary burdens on competition, in 

violation of Section 6(b) of the Exchange 

Act.’’ 137

The proposal’s elimination of a 

publicly available Exchange-affiliated 

OEMS fee schedule could permit the 

Exchange-affiliated OEMS to engage in 

unfair discrimination among Exchange 

customers. This is because the 

Commission would not be reviewing 

whether any differences in the 

application of a fee or rebate are based 

on meaningful distinctions between 

customers, issuers, brokers or dealers 

and whether those meaningful 

distinctions are unfairly discriminatory 

between customers, issuers, brokers or 

dealers.138 In sum, we agree with 

commenters that because proposed Rule 

3.66 does not aim to prevent the 

Exchange from receiving any 

competitive advantage from its 

affiliation/relationship with the OEMS it 

would not establish the independence 

as purported. 

Additionally, proposed Rule 3.66 

requires reliance on the Exchange’s 

enforcement of the conditions of Rule 

3.66 against a proposed-to-be 

unregulated Exchange-affiliated OEMS. 

One commenter states that ‘‘it is unclear 

how the Exchange would enforce the 

proposed rule or even monitor for 

compliance with it[,].’’ 139 Cboe did not 

address this concern directly and it 

remains unclear how Cboe would 

monitor for compliance. 

For all of the foregoing reasons, we 

cannot find that the proposal to allow 

the Exchange-affiliated OEMSs to not be 

regulated as a facility of the Exchange 

and not be subject to section 6 of the Act 

is consistent with the requirements of 

section 6 of the Act. 

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

section 19(b)(2) of the Exchange Act,140

that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange, and in 

particular, with sections 3(a)(1), 3(a)(2), 

and 6(b) of the Exchange Act.141

It is therefore ordered, pursuant to 

section 19(b)(2) of the Exchange Act,142

that proposed rule change (SR–CBOE– 

2024–008) be, and it hereby is, 

disapproved. 

By the Commission. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–25724 Filed 11–5–24; 8:45 am] 

BILLING CODE 8011–01–P 


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