The Cboe Exchange, Inc., a major U.S. options trading venue, has filed a proposed rule change with the Securities and Exchange Commission to introduce fees for its C1 Complex Order Book Data Feed and make related adjustments to its market data offerings. Announced in a Federal Register notice dated January 14, 2026, the filing became immediately effective under the Securities Exchange Act of 1934. This development reflects ongoing efforts by exchanges to monetize proprietary data products, potentially influencing how market participants access complex order information. By charging for this feed separately and bundling auction data at no extra cost, Cboe seeks to balance revenue generation with competitive positioning in a fragmented market data ecosystem.
Background and Purpose of the Proposal
The proposal centers on the C1 Complex Order Book Data Feed, which provides real-time information on complex order strategies traded on Cboe's platform, including multi-leg options like spreads and buy-writes. This feed includes outstanding quotes, standing orders with aggregate sizes, last sale data, and breakdowns of customer versus non-customer contracts. Previously, access to this data was bundled or waived under certain conditions, but Cboe now aims to charge separately to better reflect its value.
Cboe justifies the changes by citing the need to offer specialized data products that help market participants make informed routing and trading decisions. The exchange references Regulation NMS, adopted by the SEC in 2005, which deregulated proprietary market data to encourage innovation and efficiency. Under this framework, exchanges gained flexibility to sell data without mandating its purchase, allowing broker-dealers to select based on needs. Cboe's filing emphasizes that the feed is optional, enabling users to subscribe or cancel as business demands dictate.
Key players include Cboe as the self-regulatory organization proposing the rule, and the SEC, which oversees such filings and solicits public comments. No comments were received prior to the filing, but the notice invites input until February 4, 2026.
Key Components of the Fee Structure
Cboe proposes a tiered fee model for the C1 Complex Order Book Data Feed, effective January 2, 2026, with prorated charges for mid-month subscriptions.
Distributor fees are set at $3,000 per month for internal distributors, who use the data within their own entities, and $1,500 per month for external distributors, who share it with third parties. A distributor engaging in both would pay the higher internal fee. This structure removes an existing waiver that exempted distributors of Cboe's Options Top or Depth feeds from paying for the complex book data.
User fees include $25 per month per device or user ID for professional users, unchanged from current rates, and a new $1 per month per user for non-professional users, defined as individuals using the data for personal purposes without professional qualifications under securities laws.
Additionally, subscribers to Cboe's Options Top or Depth feeds can now access the Options Auction Feed at no extra charge. This feed provides real-time auction-related data, aligning Cboe's offerings with those of competitors like Nasdaq ISE and MRX, where auction information is integrated into broader order feeds.
Comparison to Industry Practices and Legal Precedents
Cboe's proposal draws on precedents from other exchanges, underscoring a competitive landscape where proprietary data fees are common. For instance, MIAX Options charges $2,000 monthly for internal distribution and $3,000 for external distribution of its Complex Top of Market feed, which is higher overall than Cboe's rates. Nasdaq MRX assesses $25.25 per professional user and $1 per non-professional user for its top and depth feeds, while Nasdaq Options Market charges $42.10 for professionals and $1 for non-professionals.
These comparisons highlight Cboe's fees as generally lower or comparable, particularly for professionals. The distinction between professional and non-professional users follows industry norms, as seen in SEC-approved rules across exchanges, and aims to make data more accessible to retail investors. The bundling of auction data mirrors Nasdaq's approach, where order feeds include auction messages without separate charges.
From a legal standpoint, the filing invokes Section 6(b) of the Securities Exchange Act, requiring rules to promote just and equitable trade principles and protect investors. Cboe argues the fees are equitable, as they apply uniformly and are voluntary, with no unfair discrimination. The exchange also contends the changes impose no undue burden on competition, citing alternatives like consolidated data or rival exchanges' products.
Implications and Perspectives
The short-term implications include potential cost increases for firms previously relying on waived fees, which could prompt some to reassess subscriptions. Market participants, such as broker-dealers and data vendors, may benefit from granular complex order insights, aiding in better trade execution amid rising options volumes. However, critics might view the unbundling as fragmenting data access, potentially raising overall expenses in a market where data costs are a point of contention.
Longer-term, this could spur innovation in data products, aligning with Regulation NMS goals. Exchanges like Cboe compete fiercely for liquidity, and fee structures influence where orders are routed. Perspectives vary: proponents, including Cboe, see it as enhancing efficiency by allowing tailored data purchases. Skeptics, potentially including retail-focused firms, might argue it favors larger players able to absorb fees, though the low non-professional rate mitigates this. Regulators, via the SEC, will weigh whether the fees truly foster competition without harming public interest.
In summary, Cboe's rule change introduces targeted fees for complex order data while streamlining access to auction information, reflecting broader trends in market data commercialization. Potential next steps include SEC review of any comments received, which could lead to suspension or further proceedings if concerns arise. Ongoing debates may focus on balancing exchange revenues with affordable data access, especially as options trading grows and technology evolves. Challenges ahead involve adapting to competitive pressures from other venues and ensuring compliance with evolving SEC standards on fee justification.
