SEC Division of Trading and Markets no-action letter: Cboe EDGX Exchange, Inc.

March 19, 2026
Ms. Courtney Smith
Senior Counsel
North American Equities
Cboe Global Markets
433 W Van Buren St.
Chicago, IL 60607
Re: Request for No-Action Relief From Rule 602 of Regulation NMS Submitted in Connection with Proposal to Introduce a Retail Price Improvement Program (SR-CboeEDGX-2025-072) Dear Ms. Smith, This responds to your letter dated March 11, 2026, wherein you request that the staff of the Division of Trading and Markets (the “Staff”) provide you with written assurance that it will not recommend enforcement action to the Securities and Exchange Commission (the “Commission”) pursuant to Rule 602 of Regulation NMS1 (the “Quote Rule”) with respect to certain activity contemplated by the operation of the Retail Price Improvement Program (the “Program”) proposed by Cboe EDGX Exchange, Inc. (“EDGX” or the “Exchange”). 2 Specifically, you request that the Staff not recommend enforcement action against: (1) the Exchange for failing to collect, process and make available to vendors the best bid, best offer, and quotation sizes communicated by 1 17 CFR 242.602. 2 See Securities Exchange Act Release No. 104153 (September 30, 2025), 90 FR 48098 (October 3, 2025); and Securities Exchange Act Release No. 104620 (Jan.15, 2026), 91 FR 2568 (Jan. 21,
2026) (notice of filing of Amendment No. 3 to SR-CboeEDGX-2025-072, which superseded and
replaced the original filing) (“Proposal”). On January 29, 2026, the Exchange filed Amendment No. 4 to the proposed rule change. Amendment No. 4 is available on the Commission’s website at srcboeedgx2025072-699747-2194994.pdf.

Members of the Exchange pursuant to Regulation NMS Rule 602(a), or (2) liquidity providers pursuant to Regulation NMS Rule 602(b)(1).3 As you described in your letter and the proposed rule change, the Program would establish an alternative venue for the execution of retail orders. The Program would provide for a class of market participants (Retail Member Organizations) and two order types (Retail Orders and Retail Price Improvement Orders). Retail Member Organizations would submit Retail Orders4 representing orders from retail investors to the Exchange. All Exchange Users5 would be permitted to submit Retail Price Improvement Orders that would execute against the Retail Orders. Retail Price Improvement Orders would express firm interest to price-improve on the Protected NBB or Protected NBO6 by at least $0.001 per share. Retail Price Improvement Orders will remain non-displayed at all times. The Exchange proposes to disseminate a Retail Liquidity Identifier (“RLI”) through proprietary data feeds and consolidated data streams (i.e., pursuant to the Consolidated Quotation Plan or Nasdaq UTP Plan), as appropriate, to notify market participants of the existence of Retail Price Improvement Orders. The identifier would reflect the symbol for a particular security and the side (buy or sell) of the Retail Price Improvement Order interest, but it would not include the price or size of such interest. The RLI will be disseminated when a Retail Price Improvement Order has a ranked price better than the Protected NBB or Protected NBO and will not disseminate if the price of the Retail Price Improvement Order is no longer priced higher than the Protected NBB or lower than the Protected NBO. The Quote Rule requires national securities exchanges to, among other things, make available to vendors the best bid, the best offer, and aggregate quotation sizes for each subject security listed or admitted to unlisted trading privileges which is communicated on any national securities exchange by any responsible broker or dealer.7 The Quote Rule also requires each responsible broker or dealer to promptly communicate to its national securities exchange or national securities association, pursuant to the procedures established by that exchange or association, its best bids, best offers, and 3 On March 19, 2026, the Commission approved the proposed rule change. See Securities Exchange Act Release No. 105052. 4 The definition of Retail Order would be limited to an agency order, principal order (subject to requirements of EDGX Rule 11.21(j)), or riskless principal order that meets the criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by a Retail Member Organization, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized technology. Retail Orders will be allowed to post to the EDGX Book or route to
away trading centers according to User instructions. 5 A “User” is defined in Exchange Rule 1.5(ee) as any member or sponsored participant who is authorized to obtain access to the EDGX system. 6 The Protected NBB is the best-priced protected bid and the Protected NBO is the best-priced protected offer. See EDGX Rule 1.5(u); Proposal at 2569. 7 17 CFR 242.602(a)(1).

quotation sizes for any subject security.8
A “bid” or “offer” is defined as the bid price or the offer price communicated by a member of a national securities exchange or member of a national securities association to any broker or dealer, or to any customer, at which it is willing to buy or sell one or more round lots of an NMS security, as either principal or agent, but shall not include indications of interest.9 You state Retail Price Improvement Orders, considered either on their own or together with the RLI that indicates their existence, do not meet the definition of “bid” or “offer” in Rule 600(b)(16) because they do not communicate a specific price. Based on the terms of the Program and the facts and representations contained in your letter, Division staff will not recommend enforcement action to the Commission, either against the Exchange or against liquidity providers, under the Quote Rule related to the kind of information disseminated through the Program. You should understand that this is a Division staff position with respect to enforcement only and is provided solely to respond to your request. This letter does not purport to state or imply any legal conclusions, including any conclusion as to whether your receipt of this letter was necessary or appropriate in order to operate the Program. If you have any questions regarding this letter, please email tradingandmarkets@sec.gov or call 202-551-5777.

Sincerely,

Eric Juzenas
Associate Director
Division of Trading and Markets

Attachment

17 CFR 242.602(b)(1).
17 CFR 242.600(b)(16).

March 11, 2026
Submitted electronically

Mr. Jamie Selway
Director
Division of Trading and Markets
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-1090
Re: Request for No-Action Relief From Rule 602 of Regulation NMS Submitted in Connection With Proposal to Introduce a Retail Price Improvement Program (SR￾CboeEDGX-2025-072) Dear Mr. Selway:
For the reasons set forth below, Cboe EDGX Exchange, Inc. (“EDGX” or the “Exchange”), respectfully requests assurances from the staff of the Division of Trading and Markets (the “Staff”) of the Securities and Exchange Commission (the “Commission”) that the Staff will not recommend enforcement action pursuant to Regulation NMS Rule 602 (the “Quote Rule”) with respect to the Exchange’s planned dissemination of a Retail Liquidity Identifier containing certain information regarding Retail Price Improvement Orders (“RPI Orders” or “RPI Interest”) pursuant to the proposed EDGX Retail Price Improvement RPI Program (“RPI Program”). The Exchange’s affiliate, Cboe BYX Exchange, Inc. (“BYX”), which operates a substantially similar retail liquidity program, previously sought, and received, an assurance from the Staff that it would not recommend enforcement action pursuant to Rule 602 of Regulation NMS in connection RPI Program.1 Recently, the Exchange filed a proposed rule change to introduce an RPI Program on the Exchange.2 As such, the Exchange now seeks assurances from the Staff that it will not recommend an enforcement action against: (1) the Exchange for failing to See Securities Exchange Act Release No. 104210 (November 18, 2025), 90 FR 52727 (November 18, 2025), SR-CboeBYX-2025-007 (“Notice of Deemed Approval of BYX Enhanced RPI”) and Letter from Eric Juzenas, Associate Director, Division of Trading and Markets (January 16, 2026). Securities Exchange Act Release No. 68303 (November 27, 2012), 77 FR 71652 (December 3, 2012), SR-BYX-2012-019 (“BYX Pilot Approval Order”); Securities Exchange Act. Release No. 87154 (September 30, 2019), 84 FR 53183 (October 4, 2019), SR-CboeBYX-2019-014 (“Order Approving a Proposed Rule Change to Make Permanent the Exchange’s Pilot Retail Price Improvement RPI Program, Rule 11.24, Which is Set to Expire on September 30, 2019, and Order Granding Limited Exemption Pursuant to Rule 612(c) of Regulation NMS”). See Securities Exchange Act Release No. 104153 (September 30, 2025), 90 FR 48098 (October 3, 2025), SR-CboeEDGX-2025-072 (“RPI Proposal”).

collect, process, and make available to vendors the best bid, best offer, and quotation sizes communicated by Members of the Exchange pursuant to Regulation NMS Rule 602(a), or (2) liquidity providers pursuant to Regulation NMS Rule 602(b)(1). The Exchange notes that any distinctions between the proposed EDGX RPI Program and the retail liquidity program on BYX do not cause the request for assurances from the Staff as it relates to EDGX to differ substantively from the request for relief that was granted to BYX.3

Background

On September 30, 2025, the Exchange filed a proposal to introduce an RPI Program on the Exchange.4 On September 30, 2025, the RPI Proposal was noticed by the Commission and on October 3, 2025, the RPI Proposal was published in the Federal Register. On December 19, 2025, the Commission issued an Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Proposal.5 On December 22, 2025, the Exchange filed Amendment No. 1 to the Proposal.6 On January 8, 2026, the Exchange withdrew Amendment No. 1 and filed Amendment No. 2 to the Proposal.7 On January 12, 2026, the Exchange withdrew Amendment No. 2 and filed Amendment No. 3 to the Proposal. On January 29, 2026, the Exchange filed partial Amendment No. 4 to the Proposal.8 In conjunction with the RPI Proposal, the Exchange intends to submit a request for exemptive relief from Regulation NMS Rule 612 (the “Sub-Penny Rule”)9 describing how the proposed RPI Program is consistent with the policy objectives of the Sub-Penny Rule, and are in furtherance of the public interest and protection of investors. This letter discusses the RPI Program’s proposed Retail Liquidity Identifier (“RLI”) and requests assurances from the Staff that it will not recommend an enforcement action in connection with the dissemination of bids and offers, and aggregate quotation sizes, via the RLI. The BYX retail liquidity program (“BYX RPI Program”) differs from the proposed RPI Program in that the BYX RPI Program offers an Enhanced RPI Order type, is available in securities priced below $1.00 in addition to securities priced at or above $1.00, does not offer a MidPoint Peg RPI Order (discussed infra), requires Retail Orders to be immediate-or-cancel (“IOC”), and permits RPI Orders to execute upon entry. Further, BYX has updated the definition of Retail Order to reflect the revised definition on the Exchange that was introduced through a recent approved filing. See Securities Exchange Act Release No. 104705 (January 28, 2026), 91 FR 4650 (February 2, 2026), SR-CboeEDGX-2025-035 (“EDGX Retail Order Definition Filing”). Supra note 2. See Securities Exchange Act Release No. 104470 (December 19, 2025), 90 FR 60784 (December 29, 2025), SR-CboeEDGX-2025-072 (“Order Instituting Proceedings”). See Letter from Courtney Smith (December 22, 2025) (“Amendment No. 1”). See Letter from Matthew Iwamaye (January 8, 2026) (“Amendment No. 2”). See Letter from Matthew Iwamaye (January 29, 2026) (“Amendment No. 4”). 17 CFR 242.612.

The proposed RPI Program is designed to attract retail order flow to the Exchange and allow such order flow to receive price improvement over the Protected NBBO. When there is RPI Interest priced at least $0.001 better than the Protected NBB or Protected NBO for a particular security priced at or above $1.00, the Exchange will disseminate its RLI to indicate that such interest is available on the Exchange.10 Retail Member Organizations (“RMOs”)11 will be able to submit a Retail Order12 to the Exchange, which interacts with available contra-side RPI Interest (to the extent possible) and may interact with other price improving liquidity on the EDGX Book,13 depending on the Retail Order’s instructions. Below is a description of key aspects of the proposed RPI Program.  Participants and Order Instructions – as described in Rule 11.21 and in the RPI Proposal, the RPI Program provides for a class of market participants known as RMOs and two order types, including a Retail Price Improvement (“RPI”) Order. o Retail Member Organization. An RMO is a Member that has been approved by the Exchange under Rule 11.21 to submit Retail Orders. To qualify as an RMO, a Member must conduct retail business or handle retail orders on behalf of another broker-dealer. An RMO must submit an attestation that substantially all orders it submits will qualify as a Retail Order and provide supporting documentation sufficient for the Exchange to determine whether the applicant’s order flow would meet the requirements of the Retail Order definition. The Exchange may disqualify an RMO for submitting orders designated as Retail Orders that fail to meet the requirements of the RPI Program, subject to the process set forth in Rule 11.21(c). o Retail Order. A Retail Order is an agency order, principal order (subject to the requirements of Rule 11.21(j)), or riskless principal order that meets the criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by an RMO, provided that no change is made to the terms of the order with respect to price or side of the market and the order does not originate from a trading algorithm or any other computerized methodology. A Retail Order entered principally must also satisfy the requirements in 11.21(j). A Retail Order shall operate in accordance with proposed Rule 11.21(f). 10 See proposed Rule 11.21(e) (“Retail Liquidity Identifier”). 11 See Rule 11.21(a)(1) (“Retail Member Organization”). 12 See proposed Rule 11.21(f) (“Retail Order Designation”). 13 See Rule 1.5(d). The term “EDGX Book” shall mean the System’s electronic file of orders.

o Retail Price Improvement (“RPI”) Order. An RPI Order consists of non-displayed interest on the Exchange that is identified as an RPI Order. RPI Orders are eligible to trade only with incoming Retail Orders submitted by an RMO. An RPI Order for a security priced at or above $1.00 is only executable at prices at least $0.001 better than the Protected NBB or Protected NBO and may be priced in $0.001 increments (e.g., $10.001). An RPI Order will be limited to executing a prices equal to or greater than $1.00 per share. An RPI Order is ineligible to execute at prices equal to or inferior to the Protected NBB (for buy orders) or Protected NBO (for sell orders), however an RPI Order may be entered with a limit price that is equal to or inferior to the Protected NBB or Protected NBO. An RPI Order that is ineligible to execute because it is priced equal to or inferior to the Protected NBB or Protected NBO will not be canceled and will become eligible to execute against Retail Orders should the RPI order become priced better than the Protected NBB (for buy orders) or Protected NBO (for sell orders) at a later time. An incoming RPI Order will not be eligible to interact with a resting Retail Order on the EDGX Book and upon entry will post to the EDGX Book to execute against later-arriving Retail Orders. An RPI Order may be entered as a limit order, in a sub-penny increment with an explicit limit price, as a MidPoint Peg Order (as defined in Rule 11.8(d)) (an “RPI MidPoint Peg Order”), or as a Primary Pegged Order (as defined in Rule 11.6(j)(2)). An RPI Order that is also a Primary Pegged Order (“RPI Primary Pegged Order”) must be entered with a positive (for buy orders) or negative (for sell orders) offset (“Offset Amount”). The ranked price of an RPI Primary Pegged Order is the price that results after the application of the Offset Amount, as described in Rule 11.6(j)(2). An RPI Primary Pegged Order may have its Offset Amount entered in pricing increments of $0.001. An RPI MidPoint Peg Order and an RPI Primary Pegged Order will not execute during a locked market. The System will monitor whether RPI Orders, adjusted by any Offset Amount and subject to the limit price, are eligible to interact with incoming Retail Orders. An RPI Order remains non-displayed in its entirety, including any applicable Offset Amount and the limit price. Any User is permitted, but not required, to submit RPI Orders. An RPI Order may be an odd lot, round lot or mixed lot. An RPI Order may be entered as a Post Only or Book Only order and is not eligible for routing.  Retail Order Designations – pursuant to Rule 11.21(f), RMOs may designate how a Retail Order would interact with available contra-side interest as follows:
o A Type 1 Retail Order to buy (sell) must be designated as IOC and will interact with available contra-side RPI Interest and other price improving contra-side

interest but will not interact with other available contra-side interest in the System14 that is not offering price improvement or route to other markets. The portion of a Type 1-designated Retail Order that does not execute against contra-side RPI Orders or other price improving liquidity will be immediately and automatically cancelled. o A Type 2 Retail Order to buy (sell) will be executed, posted to the EDGX Book, or cancelled, according to the User’s instructions. A Type 2-designated Retail Order will be ineligible to execute with a resting RPI Order that is not priced better than the Protected NBB or Protected NBO. A Type 2-designated Retail Order can either be submitted as an EDGX Only Order or as an order eligible for routing pursuant to Rule 11.11.  Retail Liquidity Identifier– the Exchange will disseminate the RLI through proprietary data feeds and consolidated data streams (i.e., pursuant to the Consolidated Quotation Plan or Nasdaq UTP Plan), as appropriate, when RPI Interest priced at least $0.001 better than the Protected NBB or Protected NBO for a particular security is available in the System for securities priced at or above $1.00. The RLI will reflect the symbol and side (buy or sell) of the RPI Interest but will not include the price or size of such interest. The Retail Liquidity Identifier will only be disseminated when RPI Interest is priced better than the Protected NBB or Protected NBO and will not disseminate if the price of the Protected NBB or Protected NBO moves such that the RPI Interest is no longer priced higher than the Protected NBB or lower than the Protected NBO.  Priority – as provided in proposed Rule 11.21(g), RPI Orders in the same security shall be ranked according to price then time of entry into the System, as provided for in Rule 11.9 and executions shall occur in price/time priority in accordance with Rule 11.9. Any remaining unexecuted interest in RPI Orders will remain available to interact with other contra-side incoming Retail Orders. Any remaining unexecuted portion of the Retail Order will cancel, execute, or post in accordance with proposed Rule 11.21(f). RPI Interest is ineligible to execute at prices that are equal to or inferior to the Protected NBB or Protected NBO. RPI Interest that is priced equal to or inferior to the Protected NBB or Protected NBO will not be cancelled and will become eligible to execute against Retail Orders should the RPI Interest become priced better than the Protected NBB or Protected NBO at a later time. 14 See Rule 1.5(cc). The term “System” shall mean the electronic communications and trading facility designated by the Board of Directors of the Exchange through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away.

 Order Attribution – an RMO may designate a Retail Order to be identified as a Retail Order on the EDGX Book Feed15 on an order-by-order basis or on a port-by-port basis where the RMO’s port is also designated as a Retail Order Port. An RMO that instructs the Exchange to identify all of its Retail Orders as such on a Retail Order Port will be able to override such setting and designate any individual Retail Order as Attributable16 or Non￾Attributable,17 as set forth in Rule 11.6(a). A Retail Order will be designated as Retail when routed to an away Trading Center unless otherwise instructed by the RMO. All Retail Priority Orders, as defined in Interpretations and Policies .01 to Rule 11.9 will be identified as such on the EDGX Book Feed. Applicable Law The Quote Rule requires national securities exchanges and national securities associations to, among other things, collect, process, and make available to vendors the best bid, the best offer, and aggregate quotation sizes for each subject security listed or admitted to unlisted trading privileges that is communicated on any national securities exchange by an responsible broker or dealer.18 Rule 600(b)(16)19 of Regulation NMS defines a “bid” or “offer” as the bid price or the offer price communicated by a member of a national securities exchange or member of a national securities association to any broker or dealer, or to any customer, at which it is willing to buy or sell one or more round lots of an NMS security, as either principal or agent, but shall not include indications of interest. In summarizing the Quote Rule as originally adopted in 1978, the Commission stated simply that it required exchanges and other specialized market centers “to make available quotations (including size) in all reported securities in which that market center is making a market” and made clear that “quotations made available pursuant to the Rule [were] required to be ‘firm,’ subject to certain exceptions.”20 The Quote Rule’s adoption followed “largely unsuccessful” private efforts to develop a composite quotation system and the continued dissemination by exchanges of “bid and asked price data which [did] not represent ‘firm’ 15 See Rule 13.8 for a list of EDGX Book Feeds. 16 See Rule 11.6(a). The term “Attributable” means an instruction to designate an order for display (price and size) on the EDGX Book Feed that includes the Member’s market participant identifier (“MPID”). 17 See Rule 11.6(a)(1). The term “Non-Attributable” means that orders will be displayed (price and size) on the EDGX Book Feed on an anonymous basis by the System. Unless a User elects otherwise, all orders will be defaulted to Non-Attributable by the System. 18 17 CFR 242.602(a)(1). 19 17 CFR 242.600(b)(16). 20 See Securities Exchange Act Release No. 14415 (January 26, 1978), 43 FR 4342 (February 1, 1978) at 4342.

quotations….”21 More fundamentally, the Rule sought to meet the need identified by the 1975 Amendments “for a prompt, accurate and reliable central quotation reporting system.”22 In 1996, in conjunction with the Commission’s adoption of the Limit Order Display Rule, the Quote Rule underwent significant amendments designed “to ensure that more comprehensive quotation information is made available to the public[,]” in response to Commission concerns following an exhaustive investigation and investigative report concerning trading practices in the Nasdaq market about the development of private markets with better prices for professionals than those visible and accessible to the public.23 Over the course of the last decade, certain trading systems that allow market makers and specialists to widely disseminate significant trading interest to certain market participants without making this trading interest available to the public market at large have become significant markets in their own right. Although offering benefits to some market participants, widespread participation in these hidden markets has reduced the completeness and value of publicly available quotations contrary to the purposes of the NMS.24 The 1996 amendments had the effect of requiring specialists and market makers to reflect in their public quotes any better-priced orders they broadly displayed by market makers through ECNs.25 Discussion of the Quote Rule and the RPI Program The Exchange appreciates the profoundly positive impact that the Quote Rule, as amended, has had on the National Market System, and understands the Commission’s caution with respect to the definitions that determine the scope of the Quote Rule. With the above background and this recognition in mind, we discuss below why the RPI Program is consistent with the Quote Rule. The obligation of exchanges to disseminate quotations under Regulation NMS Rule 602(a), and those of responsible brokers and dealers to communicate prices and quotation sizes to exchanges under 602(b) depend on the definition of “bid” or “offer” under Rule 600(b)(16) which states in pertinent part:
21 Id.
22 S. Rep. No. 75, 94th Cong., 1 Sess. 8-9 (1975).
23 See Securities Exchange Act Release No. 37619A (September 6, 1996), 61 FR 48290 (“Order Execution Obligations Release”). 24 Id. at 48290, 48307. 25 Id. at 48291.

Bid or offer means the bid price of the offer price communicated by a member of a national securities exchange…to any broker or dealer, or to any customer, at which it is willing to buy or sell one or more round lots of any NMS security, as either principal or agent, but shall not include indications of interest.26 The Exchange believes that the non-displayed trading interest entered into the Exchange’s System in the form of RPI Interest, considered either on their own or together with the RLI that indicates its existence, do not meet the definition of “bid” or “offer” in Rule 600(b)(16). To meet the definition, a “bid” or “offer” must include a price. Here, the RPI Program’s RPI Orders remain non-displayed at all times. Moreover, the RLI that advertises these orders does not communicate a specific price to any broker-dealer or customer. Specifically, the RLI will display when there is RPI Interest available to trade at prices at least $0.001 better than the Protected NBB or Protected NBO in securities priced at or above $1.00. The RLI will not be disseminated when RPI Interest is priced equal to or worse than the Protected NBB or Protected NBO. The proposed RPI Program is designed to contribute to the provision of better prices for retail investors, a core goal of the National Market System in general and the Quote Rule in particular. Indeed, the proposed RPI Program would enhance price competition for retail orders and increase the level of order interaction experienced by retail investors. Liquidity providers would compete for execution priority with respect to incoming Retail Orders by being ranked first at the best price. Additionally, because liquidity providers would not be able to see competing orders, they would be incentivized to set new, more aggressive prices rather than simply matching existing prices. Overall, the Exchange believes that providing transparency to market participants regarding the presence of RPI Interest though the RLI would provide the following benefits: (1) RMOs will be encouraged to route additional Retail Orders to the Exchange as there will be increased opportunities for price improvement; and (2) retail liquidity providers (“RLPs”) will be incentivized to submit RPI Interest to the Exchange as there will be additional opportunities to execute against retail order flow and minimize adverse selection costs.27 26 17 CFR 242.600(b)(16). 27 Adverse selection is the phenomenon where the price of a stock drops right after a liquidity provider purchases the stock. Marketable retail order flow is generally seen as more desirable by institutional liquidity providers as executions against retail orders are less prone to adverse selection. The Commission has previously opined that retail liquidity programs may be beneficial to institutional investors as they may be able to reduce their possible adverse selection costs by interacting with retail order flow. See BYX Pilot Approval Order at 71656.

Moreover, while Rule 602 was adopted to facilitate the establishment of a comprehensive composite quotation system across market centers as an integral component of a national market system, the dissemination of quotations in RPI Interest does not detract from this purpose. As noted directly above, the increase in RMO activity is likely to attract additional retail liquidity provision, as market participants generally prefer to execute versus retail order flow. As such, the symbol and side of available RPI Interest disseminated by the RLI are representative of interest that would not otherwise be entered by market participants interacting with non-retail order flow. The Commission has similarly indicated that RPI Interest can benefit RMOs, but is generally not useful for other purposes, such as establishing a Protected NBB or Protected NBO due to the limited nature of its use:
Quotations that Rule 602 requires to be included in an exchange’s best bid and offer are used to establish the Protected NBB or Protected NBO for an NMS stock and are eligible for protection against trade-throughs pursuant to Rule 611 of Regulation NMS. Naturally, in order to be protected such quotations must be accessible to all market participants on terms that are not unfair or unreasonably discriminatory. In contrast, access to RPI Order interest is limited to Retail Orders because many market participants may be willing to offer liquidity to retail investors at better prices than they would be willing to offer all market participants. RPI Order interest thereby can benefit retail investors by giving them an opportunity to receive better prices on exchanges, but it is unsuitable for other purposes, including establishing a national best bid and offer and eligibility for Rule 611 protection.28 Additionally, the Exchange believes that the proposed RPI Program will provide RMOs with beneficial information that they may utilize to make the best routing and execution decisions for their Retail Orders. In doing so, RMOs may seek to execute their Retail Orders on EDGX, providing them with a viable alternative to off-exchange venues and other exchanges. Enhanced competition may drive other exchanges to enhance their retail offerings by offering more competitive price improvement opportunities, thereby driving more retail order flow onto exchanges, deepening liquidity pools, enhancing price discovery, and providing increased opportunities for price improvement, thereby benefitting retail investors. Additionally, such increased competition may incentivize off-exchange venues such as wholesale broker-dealers to route orders sent to them to EDGX, as enhanced price improvement opportunities created by increased on-exchange competition for retail order flow is made more observable by the proposed RPI Program. In addition, the Program as proposed has the potential to produce better prices for 28 See Securities Exchange Act Release No. 98206 (August 23, 2023), 88 FR 59551 (August 29, 2023) (“Order Granding Application of NYSE National, Inc. for a Limited Exemption from Rule 602 of Regulation NMS for Its Retail Liquidity RPI Program”), at 59552.

retail investors, a core goal of the National Market System in general and the Quote Rule in particular. As set forth in the Exchange’s Sub-Penny Exemptive Relief Request, the Program would enhance price competition for retail orders and increase the level of order interaction experienced by retail investors.29 The Exchange also notes that every aspect of the proposed RPI Program will be fully transparent and will be reflected in the Exchange’s rulebook, will be shared publicly through the SEC rule filing process, and is subject to comment by any market participant or member of the public who cares to comment. Indeed, the proposed RPI Program will be implemented only if approved by the Commission. Additionally, the trading activity conducted through the RPI Program is subject to extensive market surveillance pursuant to the Exchange’s obligation as a self-regulatory organization. As such, the anticipated additional retail order flow attracted to the RPI Program will result in individual investors’ order flow being executed on a transparent, well￾regulated, national securities exchange, that disseminates in real-time via the RLI the symbol and side in which RPI Interest is available to trade with individual investor orders. This is in stark contrast to off-exchange venues, such as wholesaler broker-dealers, that trade bilaterally as principal with individual investor orders based not on the displayed price the wholesaler is willing to trade, but a formula that depends on past execution quality of the wholesaler, its relationship with the broker-dealer, and other factors.

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For the reasons set forth above, the Exchange requests assurance that the Staff will not recommend enforcement action pursuant to Regulation NMS Rule 602 with respect to the RPI Program’s dissemination of a RLI or with respect to RPI Interest advertised by the RLI. In particular, the Exchange asks for assurance from the Staff that it will not recommend such action with respect to: (1) the Exchange with respect to collecting, processing, and making available to vendors the best bid, best offer, and quotation sizes communicated by Members of the Exchange, or (2) liquidity providers entering RPI Interest under the RPI Program. . If you have any questions, please contact me at (913) 222-4652, or csmith@cboe.com. Very truly yours, 29 The Sub-Penny Exemptive Relief Request also argues in favor of relief from the Sub-Penny Rule because the Exchange offers a robust regulatory and surveillance alternative to existing oversight of internalization. This ground, while not discussed herein, also favors relief from the Quote Rule. We ask that pages 10 –12 of the Sub-Penny Exemptive Relief Request be incorporated by reference into this request for relief.

Courtney Smith
Courtney Smith
Senior Counsel
North American Equities
Cboe Global Markets cc: Eric Juzenas (SEC)
Kathleen Gross (SEC)
Jenna Dodd (SEC)
Kevin Brennan (SEC)