# Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 11.23(d)(2)(B) (Extending the Quote-Only Period for Initial Public Offering (“IPO”) Auctions)
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 December 17, 2025, Cboe BZX Exchange, Inc. (the “Exchange” or “BZX”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II 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.
[^1] 15 U.S.C. 78s(b)(1).
[^2] 17 CFR 240.19b-4.
**I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change**
Cboe BZX Exchange, Inc. (“BZX” or the “Exchange”) is filing with the Securities and Exchange Commission (“Commission” or “SEC”) a proposed rule change to amend Exchange Rule 11.23(d)(2)(B) (Extending the Quote-Only Period for Initial Public Offering (“IPO”) Auctions) to: (1) delineate between BZX-listed corporate securities and exchange-traded product (“ETP”) IPO Securities; and (2) expand the circumstances under which the Exchange may extend the Quote-Only Period for IPO Auctions in an ETP IPO Security.
The text of the proposed rule change is also available on the Commission's website ( *https://www.sec.gov/rules/sro.shtml* ), the Exchange's website ( *https://www.cboe.com/us/equities/regulation/rule_filings/bzx/* ), and at the principal office of the Exchange.
**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**
**Purpose**
The Exchange proposes to amend Rule 11.23(d)(2)(B) (Extending the Quote-Only Period [^3] for IPO Auctions) to: (1) delineate between BZX-listed corporate securities and ETP IPO Securities in proposed Rules 11.23(d)(2)(B) and (C), respectively; [^4] and (2) expand the circumstances under which the Exchange may extend the Quote-Only Period for IPO Auctions in ETP IPO Securities. The Exchange also proposes to update rule numbering and lettering to accommodate these changes and to update cross-references throughout Rule 11.23 as necessary.
[^3] The term “Quote-Only Period” shall mean a designated period of time prior to a Halt Auction, a Volatility Closing Auction, or an IPO Auction during which Users may submit orders to the Exchange for participation in the auction. *See* Exchange Rule 11.23(a)(17).
[^4] The term “ETP IPO Security” means a Derivative Security that is eligible to participate in an IPO Auction pursuant to Rule 11.23(d). *See* Exchange Rule 11.23(a)(24). *See also* Exchange Rule 1.5(dd) defining “Derivative Security”.
**Background**
Exchange Rule 11.23(d) governs IPO and halt auctions on the Exchange. Under Rule 11.23(d)(1)(A), the Quote-Only Period for ETP IPO Auctions commences at 8:00 a.m. [^5] and terminates at the conclusion of the IPO Auction, which generally occurs shortly after 9:30 a.m. There are no IPO Auction-specific order types. All Eligible Auction Orders associated with an IPO Auction are queued until the end of the Quote-Only Period, at which time they become eligible for execution in the IPO Auction. Orders must be received prior to the end of the Quote-Only Period to participate in the IPO Auction.
[^5] All times referenced herein are Eastern Time.
Exchange Rule 11.23(d)(2)(B) currently provides five circumstances under which the Exchange may extend the Quote-Only Period for IPO Auctions. These circumstances apply to both BZX-listed corporate securities and ETP IPO Securities:
(i) there are unmatched market orders on the Auction Book associated with the auction;
(ii) the underwriter requests an extension;
(iii) the Indicative Price moves the greater of 10% or fifty (50) cents in the fifteen (15) seconds prior to the auction;
(iv) in the event of a technical or systems issue at the Exchange that may impair the ability of Users to participate in the IPO Auction or of the Exchange to complete the IPO Auction;
(v) a Derivative Security fails to meet the Exchange's listing qualification requirements as set forth in Rule 14.11; or
(vi) there is a security that is the subject of an initial pricing on the Exchange of a security that has not been listed on a national securities exchange immediately prior to the initial pricing.
The duration of each Quote-Only Period extension depends on the triggering circumstance. Provisions (ii), (iv), (v), and (vi) are manual extensions without fixed durations. Provisions (i) and (iii) are automatic extensions: provision (i) extends the Quote-Only Period for as long as unmatched market orders remain on the Auction Book, while provision (iii) extends the Quote-Only Period for five minutes.
**Proposal**
The Exchange now proposes to separately delineate the circumstances under which it may extend the Quote-Only Period for IPO Auctions applicable to BZX-listed corporate securities and ETP IPO Securities under proposed Rules 11.23(d)(2)(B) and (C), respectively. The Exchange also proposes to adopt an additional extension provision applicable to ETP IPO Securities.
The Exchange proposes to modify the circumstances under which the Exchange may extend the Quote-Only applicable to BZX-listed corporate securities by eliminating existing Rules 11.23(d)(2)(B)(v) and (vi) as these provisions are not applicable to BZX-listed corporate securities. The Exchange also proposes to make a ministerial change to Rule 11.23(d)(2)(B)(iii) to remove the extraneous word “where”.
The Exchange proposes to adopt Rule 11.23(d)(2)(C), which would govern extensions of the Quote-Only Period for IPO Auctions in ETP IPO Securities and set forth those circumstances under proposed Rules 11.23(d)(2)(C)(i) through (vi). The Exchange also proposes to use the term “ETP IPO Security” throughout proposed Rule 11.23(d)(2)(C) rather than “Derivative Security.” [^6] Because an ETP IPO Security is a subset of Derivative Securities that are eligible to participate in the IPO Auction, this change is ministerial but adds precision and clarity to the Exchange's rulebook.
[^6] The term “Derivative Security” means a security that meets the definition of “new derivative securities product” in Rule 19b-4(e) under the Exchange Act. *See* Exchange Rule 1.5(dd).
Proposed Rule 11.23(d)(2)(C)(i) is identical to existing Rule 11.23(d)(2)(B)(i). The Exchange does not propose to include existing Rule 11.23(d)(2)(B)(ii) that allows the Quote-Only Period to be extended upon underwriter request in proposed Rule 11.23(d)(2)(C). ETP IPO Securities do not have underwriters, making this provision inapplicable.
Proposed Rules 11.23(d)(2)(C)(ii), (iii), (iv), and (v) are substantively identical to Rules 11.23(d)(2)(B)(iii), (iv), (v), and (vi), respectively, except that the proposed rules refer specifically to an ETP IPO Security rather than a Derivative Security.
The Exchange proposes to adopt Rule 11.23(d)(2)(C)(vi), which would establish a new circumstance under which the Exchange may extend the Quote-Only Period for IPO Auctions in ETP IPO Securities. [^7] Specifically, the proposed rule would permit the Exchange to extend the Quote-Only Period if the issuer of the ETP IPO Security does not opt out of the “price validation test” described below and the ETP IPO Security does not pass the price validation test. [^8]
[^7] The Exchange is not proposing to apply this additional extension provision to BZX-listed corporate securities because underwriters are involved in corporate IPOs and may request that the Exchange extend the Quote-Only Period under existing Rule 11.23(d)(2)(B)(ii). ETP IPO Securities, by contrast, do not have an underwriter. The proposed provision is designed to provide a protection analogous to that offered by an underwriter in a corporate security IPO; namely, ensuring that the IPO Auction occurs at a price in line with the issuer's expectations.
[^8] If the issuer opts out of the price validation test, the Quote-Only Period would only be extended for price volatility under proposed Rule 11.23(d)(2)(C)(ii) ( *i.e.,* if the Indicative Price moves the greater of 10% or $0.50 in the fifteen seconds prior to the auction), which currently exists under Rule 11.23(d)(2)(B)(iii) and is being relocated to proposed Rule 11.23(d)(2)(C)(ii) to improve clarity and distinguish between BZX-listed corporate securities and ETP IPO Securities. If the issuer does not opt out, both the price volatility protections under proposed Rule 11.23(d)(2)(C)(ii) and the price validation test under proposed Rule 11.23(d)(2)(C)(vi) would apply.
**(a) Indicative Price and Expected Price Mechanism**
Starting at 8:00 a.m. with the commencement of the Quote-Only Period, the System will determine and display the live Indicative Price of the IPO Auction to the lead market maker (“LMM”) through a tool accessible via the Exchange's web portal. The LMM may approve or re-approve an Indicative Price via the tool as often as necessary prior to 9:45 a.m. The last approved Indicative Price becomes the “Expected Price.”
The distinction between these terms is important: the Indicative Price is a live price that changes continuously during the Quote-Only Period as market participants enter and cancel orders, while the Expected Price is an Indicative Price that the LMM has locked in ( *i.e.,* approved) at a specific point in time prior to 9:45 a.m.
**(b) Price Band Selection**
At any time prior to 9:45 a.m., the LMM may select price bands for the purpose of applying the price validation test. [^9] The LMM may select an upper price band ( *i.e.,* the maximum amount by which the Indicative Price may exceed the Expected Price) and a lower price band ( *i.e.,* the maximum amount by which the Indicative Price may fall below the Expected Price). [^10] If the LMM does not select price bands, the Exchange will automatically apply default upper and lower price bands of $0.10. [^11]
[^9] As discussed above, the LMM may approve new Indicative Prices ( *i.e.,* provide a new Expected Price) as often as necessary prior to 9:45 a.m.
[^10] The upper price band and lower price band may be set at different distances from the Expected Price.
[^11] The Exchange will automatically apply the upper and lower price bands of $0.10 if the LMM has not selected price bands by 9:30 a.m. However, the LMM can select or change the price bands at any time prior to 9:45 a.m.
The price bands available for selection shall be in such increments and at such price points as may be established from time to time by the Exchange. The available price bands shall include $0 but shall not exceed $0.50. Initially, available price bands will range from $0 to $0.50 in increments of $0.01. Thus, the LMM may select price bands of $0 ( *i.e.,* no deviation from the Expected Price would be permitted), $0.01, $0.02, or any other $0.01 increment up to $0.50. The LMM may select different price bands above and below the Expected Price.
The Exchange reserves the right to stipulate wider increments (such as $0.05) or price bands that include certain price points but exclude others (for example, increments of $0.01 up to $0.10, and increments of $0.05 thereafter). However, the Exchange will not, absent a proposed rule change, allow price bands wider than $0.50. The Exchange will notify Members and the public of changes to available price bands or increments through a notice widely disseminated at least one week in advance of the change. In selecting available price bands and increments, the Exchange will consider input from LMMs and other market participants, as well as the results of past usage, to adopt price bands and increments that promote efficient initiation of trading and protect investors and the public interest.
**(c) Price Validation Test Criteria**
An ETP IPO Security does not pass the price validation test if the Indicative Price differs from the Expected Price by an amount moves in excess of the price bands set around the Expected Price or the LMM does not provide an Expected Price. For example, assume that the Indicative Price for the IPO Auction is displayed to the LMM at $32.00 per share, and the LMM approves that Indicative Price, thereby establishing an Expected Price of $32.00 per share. If the LMM selects an upper price band of $0.10 and a lower price band of $0.05, the Indicative Price calculated by the System for the IPO Auction could not be higher than $32.10 nor lower than $31.95. If the LMM does not select price bands, the Exchange will apply the default price bands of $0.10, and the Indicative Price could not be higher than $32.10 nor lower than $31.90.
Similar to existing Rules 11.23(d)(2)(B)(i) through (vi), if the price validation test fails during the IPO Auction process, the Quote-Only Period will automatically extend, but in five-second increments. The Quote-Only Period would continue seamlessly, with Members able to continue entering or canceling orders. The ETP IPO Security would then repeat the price validation test until the conditions of proposed Rule 11.23(d)(2)(C)(i) through (vi) are no longer met, at which point the IPO Auction would occur.
If the ETP IPO Security does not pass the price validation test, the LMM may, but is not required to, select different price bands or approve a new Expected Price before recommencing the iterative process. The System would automatically run the price validation checks by comparing the Expected Price to the Indicative Price to ensure that the Indicative Price falls within the price bands set around the Expected Price.
This process can continue until 9:45 a.m., at which point the IPO Auction would occur unless the conditions provided in proposed Rule 11.23(d)(2)(C)(i) through (v) are met. If an LMM does not approve an Indicative Price ( *i.e.,* does not provide an Expected Price) prior to 9:45 a.m., the Quote-Only Period may extend until 9:45 a.m. The Exchange believes that ending the price validation test at 9:45 a.m. with no exceptions is appropriate because by that time, the LMM would be expected to step in and respond to any excess demand, and any excess volatility in the ETP IPO Security would be mitigated through the proposed validation checks.
The LMM would be able, but not required, to select different price bands or approve a new Indicative Price ( *i.e.,* provide a new Expected Price) for each price validation check. For example, an LMM might initially select upper and lower bands of $0, such that the IPO Auction would not occur unless the Indicative Price exactly equaled the Expected Price. If the security did not pass the validation check, however, the LMM could subsequently widen the price bands to allow the IPO Auction to proceed at a price that varies from the Expected Price, or provide a new Expected Price that equals the current Indicative Price. Such price deviations are possible because market participants may continue to enter and cancel orders during the Quote-Only Period, causing the Indicative Price to fluctuate.
In addition, the LMM may step in and begin providing markets in an ETP IPO Security on its first day of trading, which could further promote price stability. The Exchange may also determine at any point during the Quote-Only Period to postpone and reschedule the IPO Auction. [^12]
[^12] The Exchange's authority to postpone and reschedule the IPO Auction is set forth in existing Rule 11.23(d)(1)(B)(vi).
Proposed Rule 11.23(d)(2)(C)(vi) would generally extend the Quote-Only Period unless an issuer opts out of the price validation test or the Indicative Price falls within the price bands at 9:30 a.m. If an LMM does not approve an Indicative Price ( *i.e.,* does not provide an Expected Price) by 9:30 a.m., the Quote-Only Period will extend in five-second intervals until 9:45 a.m. The extension will end earlier if the LMM provides an Expected Price during that 15-minute period for which the price validation test can be applied. The LMM may provide an Expected Price at any time before 9:45 a.m.
If an issuer opts out of the price validation test, the Quote-Only Period will generally only be extended for price volatility if the Indicative Price moves the greater of 10% or fifty cents in the fifteen seconds prior to the auction, as provided in existing Rule 11.23(d)(2)(B)(iii) and proposed Rule 11.23(d)(2)(C)(ii).
The Exchange notes that the LMM's involvement in timing the commencement of trading in an IPO Auction for an ETP IPO Security is consistent with an underwriter's involvement in the existing IPO Auction process for BZX-listed corporate securities. Similar to an underwriter in a corporate IPO, the LMM, with market knowledge of the order book and an understanding of the security, is well positioned to provide an Expected Price and applicable price bands that facilitate the price validation check.
Accordingly, the Exchange believes it is in the best interest of the market to give LMMs input into the timing of the IPO Auction to help ensure the fair and orderly launch of trading in an ETP IPO Security. The Exchange believes that additional time for price formation in the IPO Auction will benefit investors by helping to ensure the IPO Auction occurs at a price that generally aligns with the LMM's expectations. Furthermore, delaying an IPO Auction in an ETP is not novel, as Nasdaq currently begins its IPO auction process at 9:40 a.m. [^13]
[^13]*See* Securities Exchange Act No. 103085 (May 20, 2025) 90 FR 22424 (May 27, 2025) (SR-Nasdaq-2025-011) (Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Introduce Functionality To Initiate a Trading Halt for Exchange-Traded Products on Launch Day).
Last, the Exchange proposes to re-letter existing Rules 11.23(d)(1)(C) through (F) as (D) through (G), respectively, and to update cross-references to Rule 11.23 throughout the rule to account for the re-lettered provisions.
**2. Statutory Basis**
The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act. [^14] Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) [^15] 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) [^16] requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
[^14] 15 U.S.C. 78f(b).
[^15] 15 U.S.C. 78f(b)(5).
[^16]*Id.*
The Exchange believes that its proposal to offer optional functionality to permit ETP issuers the ability to utilize a price validation test during the Quote-Only Period would maximize the chances of more efficient price discovery and remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, protect investors because the initial sale price would be based on market interest and the matching of buy and sell orders in an auction that would be open to all market participants. Today, an ETP IPO Security would open for trading during the IPO Auction at an initial price that is based on market interest at that time. Accordingly, the Exchange believes that the proposed process would provide safeguards for the opening price of the ETP that is based on additional market information, thereby protecting investors and the public interest. [^17]
[^17] The Exchange is not proposing to apply this additional extension provision to BZX-listed corporate securities because underwriters are involved in corporate IPOs and may request that the Exchange extend the Quote-Only Period under existing Rule 11.23(d)(2)(B)(ii). ETP IPO Securities, by contrast, do not have an underwriter. The proposed provision is designed to provide a protection analogous to that offered by an underwriter in a corporate security IPO; namely, ensuring that the IPO Auction occurs at a price in line with the issuer's expectations.
The Exchange believes that the proposed price validation test will benefit investors by providing additional time for price formation in the IPO Auction for ETP IPO Securities and will benefit investors by helping to ensure the IPO Auction occurs at a price that generally aligns with the LMM's expectations. In particular, the Exchange believes that the change will facilitate the commencement of orderly trading in ETPs on their first day of trading by providing the LMM with flexibility throughout the initial launch process to allow the development of price stability prior to opening. The Exchange believes that the LMM's involvement in timing the commencement of trading in the ETP is consistent with the Act as this will promote the fair and orderly launch of trading in the ETP. The Exchange believes that the LMM, with their market knowledge of the book and an understanding of the ETP IPO Security, would be well placed to select appropriate price bands for the price validation test and to approve the Indicative Price ( *i.e.,* provide the Expected Price). However, if the LMM does not provide price bands the Exchange will apply default price bands. Accordingly, the Exchange believes it is in the best interest of the market to give LMMs the opportunity to provide input into the price validation test to help ensure the fair and orderly launch of trading in the ETP.
The proposed language allowing the LMM to select price bands and approve the Expected Price is designed to allow flexibility to promote efficient price discovery while protecting against unexpected volatility. The Exchange believes that limiting price bands to a maximum of $0.50 is reasonable and appropriate to balance the need for price stability with the need to allow the market to discover the appropriate opening price. The Exchange will notify Members and the public of any changes to available price bands or increments at least one week in advance of the change, ensuring transparency and allowing market participants to adjust their strategies accordingly.
Furthermore, the Exchange believes that requiring the IPO Auction in an ETP IPO Security to generally occur by 9:45 a.m. at the latest is reasonable and appropriate because by that time, the LMM would be expected to step in and respond to any excess demand, and any excess volatility in the ETP would be protected through the proposed validation checks. However, the IPO Auction may be delayed past 9:45 a.m. if the criteria in proposed Rules 11.23(d)(2)(C)(i) through (v) are met. This timing is also consistent with market practice, as Nasdaq currently begins its IPO auction process at 9:40 a.m. for ETPs.
The Exchange also believes that making this functionality optional promotes just and equitable principles of trade and does not unfairly discriminate between issuers. ETP issuers, in consultation with the LMM, are best situated to determine whether to utilize the price validation test based on their understanding of the ETP and market conditions. Each price discovery process, whether the current process or the new proposed process, is designed to arrive at an IPO opening price that will benefit investors by helping to ensure the IPO Auction occurs at a price that generally aligns with the LMM's expectations.
Finally, the Exchange believes that the proposed amendments to delineate between BZX-listed corporate securities and ETP IPO Securities promote clarity and transparency in the Exchange's rules. The proposed changes recognize the unique characteristics of ETPs, including the absence of an underwriter, and tailor the Quote-Only Period extension provisions accordingly. This promotes just and equitable principles of trade by ensuring that the rules applicable to each security type are appropriate for that security's characteristics. Additionally, the proposed re-lettering of existing Rule 11.23(d)(1)(C) through (F) to (D) through (G), and the corresponding updates to cross-references throughout Rule 11.23, enhance the organizational structure and usability of the rulebook, further promoting clarity and reducing the potential for confusion.
**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 competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe the proposed rule change will impose any burden on intramarket competition as it is designed to provide an optional price validation test for ETP issuers and their LMMs to utilize during the IPO Auction process. The functionality is entirely optional and ETP issuers may elect to use the existing price volatility protections under Rule 11.23(d)(2)(B)(iii) (and proposed Rule 11.23(d)(2)(C)(ii)) or the new proposed price validation test under Rule 11.23(d)(2)(C)(vi). Each price discovery process is designed to arrive at an opening price that generally aligns with the LMM's expectations.
The Exchange believes that making this functionality optional promotes just and equitable principles of trade and does not unfairly discriminate between issuers or market participants. ETP issuers, in consultation with the LMM, are best situated to determine whether to utilize the price validation test based on their understanding of the ETP and market conditions. The proposed rule changes do not advantage or disadvantage any particular category of market participant. All market participants may participate in the IPO Auction process on equal terms regardless of whether the issuer elects to use the price validation test. Market participants will continue to have the ability to enter orders during the Quote-Only Period and participate in the IPO Auction under the same terms as they do today.
Furthermore, the Exchange believes the proposed price validation test leverages the LMM's market knowledge and role in the opening process. The LMM's involvement in selecting price bands and approving the Indicative Price ( *i.e.,* providing the Expected Price) is designed to promote fair and orderly trading in the ETP on its first day of trading, which benefits all market participants by reducing unexpected volatility and enhancing price discovery.
The Exchange does not believe the proposed rule change will impose any burden on intermarket competition. The proposed rule change is designed to enhance the competitiveness of the Exchange's ETP listing and trading services by providing an additional optional tool for price discovery on launch day. This functionality is similar to processes offered by another exchange [^18] and is designed to attract ETP listings to the Exchange by offering issuers greater flexibility and enhanced safeguards during the critical first moments of trading.
[^18]*See* Nasdaq Rule 4120(c)(11) and Securities Exchange Act No. 103085 (May 20, 2025) 90 FR 22424 (May 27, 2025) (SR-Nasdaq-2025-011) (Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Introduce Functionality To Initiate a Trading Halt for Exchange-Traded Products on Launch Day).
The proposed rule change does not impose restrictions on trading or order routing that would disadvantage market participants on other exchanges. To the extent the proposed functionality makes the Exchange a more attractive venue for ETP listings or trading, this reflects legitimate competition among exchanges to offer superior services and functionality. Market participants on other exchanges are welcome to become Members and trade on BZX if they determine that this proposed rule change has made BZX more attractive or favorable. Similarly, other exchanges remain free to propose similar or alternative functionality for their own ETP listings.
The Exchange notes that Nasdaq currently offers similar functionality for ETP IPO openings, beginning its IPO auction process at 9:40 a.m. Both the Exchange's proposal and the Nasdaq functionality introduce optional functionality for ETP IPO auctions that allows issuers to utilize a price validation test during the IPO opening process. The key similarities include the optional nature of the functionality, whereby ETP issuers may elect to opt into the price validation process. Both proposals provide that the LMM (on BZX) or DLP (on Nasdaq) may select upper and lower price bands for purposes of the price validation test, with a maximum price band of $0.50. Under both functionalities, the LMM/DLP must approve an Expected Price before the validation test is applied, and if the security does not pass the price validation test, the LMM/DLP may (but is not required to) select different price bands before recommencing the process. Both exchanges will notify members and the public of any changes to available price bands or increments at least one week in advance. Additionally, both functionalities require that the IPO auction occur by 9:45 a.m. ET at the latest under the price validation test. Both proposals also delineate between corporate IPO securities and ETP IPO Securities, recognizing the unique characteristics of ETPs, including the absence of an underwriter.
The Exchange's proposal differs from the Nasdaq Proposal in several respects. First, the Exchange specifies default price bands of $0.10 if the LMM does not select price bands, whereas the Nasdaq functionality does not specify default bands and leaves the matter to DLP discretion. Second, the Exchange integrates the ETP IPO Auction provisions into its existing Rule 11.23 governing auctions and uses its existing Quote-Only Period terminology and structure, whereas Nasdaq created a new halt category under Rule 4120(a)(15) and introduced new terminology including a “Display Only Period” followed by a “Pre-Launch Period.” Third, the Exchange's rule text is more concise and streamlined, reflecting the Exchange's approach of adapting its existing auction framework for ETP IPO Securities rather than creating an entirely new process. Fourth, while both proposals establish similar timing requirements (auction by 9:45 a.m. ET). The Exchange believes these differences reflect variations in existing rule structures, terminology, and organizational approaches between the exchanges, but do not represent material differences in the functionality or investor protections provided. Both proposals are designed to facilitate orderly price discovery for ETP IPO Securities by providing optional price validation mechanisms that leverage the expertise of the LMM or DLP while maintaining flexibility for issuers and protecting against unexpected volatility.
The proposed rule change is designed to provide comparable functionality to promote competitive equality among exchanges in the ETP listing market. Accordingly, the Exchange believes the proposed rule change will promote competition among exchanges while protecting investors through enhanced price discovery mechanisms.
**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**
Within 45 days of the date of publication of this notice in the *Federal Register* or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule change should be disapproved.
**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-CboeBZX-2025-149 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-CboeBZX-2025-149. 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 filing 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-CboeBZX-2025-149 and should be submitted on or before January 21, 2026.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. [^19]
[^19] 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.