The Securities and Exchange Commission has issued a notice regarding a proposed rule change by Cboe C2 Exchange, Inc., filed on December 17, 2025, to establish fees for its Complex Order Book Data Feed. This filing, effective immediately under Section 19(b)(3)(A) of the Securities Exchange Act of 1934, introduces charges for accessing real-time data on complex order strategies, such as spreads and buy-writes. The change, set to take effect on January 2, 2026, eliminates a prior fee waiver and aims to provide market participants with optional, paid access to detailed order book information. This development reflects ongoing efforts by exchanges to monetize proprietary data products amid competitive pressures in the options trading landscape, potentially influencing how firms route orders and assess market conditions.
Background and Purpose
Cboe C2 Exchange operates as a self-regulatory organization under the Securities Exchange Act of 1934. The proposed rule change targets the C2 Complex Order Book Data Feed, which delivers real-time information including outstanding quotes, aggregate sizes, last sale data, and totals of customer versus non-customer contracts for multi-leg strategies. Previously, distribution fees for this feed were waived for distributors of related C2 Options Top or Depth feeds. The exchange now seeks to implement standalone fees, arguing that this aligns with Regulation NMS, adopted in 2005 by the SEC to promote efficiency and competition in market data distribution.
Regulation NMS deregulated proprietary data, allowing exchanges greater flexibility to offer unique products. As stated in the filing, 'Efficiency is promoted when broker-dealers may choose to receive (and pay for) additional market data based on their own internal analysis of the need for such data.' This proposal builds on that framework, enabling C2 to charge for data that aids in routing decisions and market analysis without mandating its use.
Key Players and Filing Details
The primary entities involved are Cboe C2 Exchange and the SEC. Cboe C2, part of the larger Cboe Global Markets network, submitted the proposal under Rule 19b-4, which allows for immediate effectiveness while soliciting public comments. The filing includes statements on the purpose, statutory basis, and competitive impact, prepared by the exchange itself.
Specific fees outlined include $1,500 per month for internal distributors and $1,000 per month for external distributors. User fees are set at $25 per month per device or user ID for professionals, with a new $1 per month per non-professional user charge. Mid-month subscriptions will be prorated. The exchange justifies these by noting their optionality: 'The C2 COB Data Feed is optional for market participants to subscribe to if they believe it to be helpful and it is not required for Options Members to purchase in order to access the Exchange.'
Comparison to Competitors and Market Practices
Competitor exchanges employ similar pricing models, providing context for Cboe's proposal. For instance, MIAX Options charges $2,000 per month for internal distribution and $3,000 for external distribution of its Top of Market feed, with separate fees for its Complex Top of Market feed. Nasdaq MRX assesses $25.25 per professional user and $1 per non-professional user for its top and depth feeds, while Nasdaq PHLX maintains distinct charges for simple and complex data.
These examples illustrate a common industry practice of separating fees for simple and complex order data. Cboe's proposed rates are generally lower or comparable, such as its $25 professional user fee versus Nasdaq MRX's $25.25. The filing asserts that this structure does not impose unfair burdens, as users can opt out or choose alternatives, fostering competition as envisioned by Regulation NMS.
Legal and Regulatory Basis
The proposal cites consistency with Section 6(b)(5) of the Act, which requires exchange rules to promote just and equitable trade principles and protect investors. It also aligns with Section 6(b)(4), mandating equitable fee allocation. The exchange argues that fees are reasonable because they are voluntary and constrained by competition: 'Firms have a wide variety of alternative market data products from which to choose, such as similar proprietary data products offered by other exchanges.'
Precedents like the SEC's 2005 Regulation NMS amendments support this, emphasizing innovation in data provision. No specific court cases are referenced in the filing, but the structure echoes approvals for similar fee changes at exchanges like Nasdaq and MIAX, where the SEC has upheld proprietary data fees when they enhance market efficiency without discrimination.
Potential Implications and Perspectives
Short-term implications include increased costs for firms relying on the data, potentially prompting some to reassess subscriptions. Distributors previously benefiting from waivers may need to adjust pricing models or pass costs to users. Long-term, this could encourage more granular data usage, improving order routing efficiency and market transparency.
Different perspectives emerge among stakeholders. Market data vendors and large firms might view the fees as a fair monetization of valuable insights, aligning with profit-driven exchange models. Smaller participants or retail investors could see it as adding barriers, though the low non-professional fee mitigates this. Regulators, represented by the SEC's comment solicitation, may weigh whether the change truly promotes competition or risks concentrating data access. No endorsements are made here, but these views highlight debates on data equity in fragmented markets.
In summary, Cboe's proposal introduces structured fees for a specialized data product, grounded in regulatory frameworks that prioritize choice and competition. Potential next steps include the SEC's review of public comments, due by January 21, 2026, which could lead to suspension or approval proceedings. Ongoing challenges involve balancing innovation with accessibility, amid broader discussions on market data costs and exchange profitability. Future trajectories might see similar adjustments across exchanges, influenced by technological advancements in data analytics and evolving SEC oversight.
