The Securities and Exchange Commission (SEC) on November 18, 2025, issued a notice declaring that multiple proposed rule changes from 14 self-regulatory organizations have been deemed approved pursuant to Section 19(b)(2)(D) of the Securities Exchange Act of 1934. These approvals, effective as of various dates in October and November 2025, cover three distinct areas: enhancements to colocation services at NYSE-affiliated exchanges, permissions for listing options on commodity-based trust shares across several options exchanges, and modifications to the retail price improvement program at Cboe BYX Exchange. This notice, published in the Federal Register on November 21, 2025, marks the culmination of filing processes that began earlier in the year, highlighting the SEC's procedural mechanism for automatic approval when no explicit action is taken within statutory deadlines. The changes could influence market infrastructure, trading options for commodity-linked products, and retail investor protections, underscoring the evolving landscape of U.S. securities regulation.
Background on Deemed Approvals
Deemed approvals under Section 19(b)(2)(D) of the Act occur when the SEC does not approve, disapprove, or institute proceedings on a proposed rule change within specified time frames, typically 45 days from publication, with possible extensions. This process ensures efficiency in rule-making while allowing for public comment and regulatory review. In this case, the proposals were filed between February and August 2025, published for comment in the Federal Register shortly thereafter, and subjected to extensions and proceedings as noted in the notice. For instance, several options-related filings saw designations for longer review periods and orders instituting proceedings, as detailed in footnotes referencing specific SEC releases. This mechanism has historical precedents, such as in prior exchange rule amendments for market data fees or trading halts, where automatic approvals have facilitated timely implementation without explicit commission orders.
The key players include major exchange groups: NYSE and its affiliates (NYSE American, NYSE Arca, NYSE National, NYSE Texas), Cboe entities (Cboe Exchange, Cboe BZX, Cboe EDGX, Cboe BYX), Miami International Securities Exchange and affiliates (MIAX, MIAX Pearl, MIAX Sapphire), Nasdaq ISE, and BOX Exchange. These self-regulatory organizations (SROs) operate under SEC oversight, with rule changes requiring compliance with the Act's standards for fair competition and investor protection.
Colocation Services Amendments
Five NYSE-affiliated exchanges filed identical proposals on August 27, 2025, to amend their connectivity fee schedules by adding hardware procurement services and managed services in colocation facilities. Colocation refers to the practice where market participants house their servers in data centers near exchange matching engines to reduce latency in trading. The new services would allow exchanges to procure hardware on behalf of users and manage it, potentially streamlining operations for firms without in-house expertise.
Published for comment on September 5, 2025, these filings (e.g., SR-NYSE-2025-34) received no disapprovals or further proceedings by October 20, 2025, leading to deemed approval. This builds on prior SEC approvals for colocation expansions, such as those in 2010 that established fair access rules under Regulation NMS. Perspectives vary: proponents argue it enhances market efficiency by equalizing access to technology, while critics, including some investor advocacy groups, contend it could favor larger firms and raise antitrust concerns under the Act's Section 6(b)(8). Short-term implications include potential fee revenues for exchanges, with long-term effects possibly influencing competition among data center providers.
Options on Commodity-Based Trust Shares
Ten exchanges proposed amendments to their rules to permit the listing and trading of options on commodity-based trust shares, which are exchange-traded products holding physical commodities or futures, such as those tracking gold or bitcoin. Filings began as early as February 7, 2025 (e.g., SR-ISE-2025-08), with most clustered in March 2025. For example, NYSE Arca's amendment to Rule 5.3-O sought to expand criteria for underlying securities, aligning with similar changes at Cboe and MIAX exchanges.
These proposals underwent extended reviews, including orders instituting proceedings (e.g., Release No. 103240 for NYSE American and Arca) to assess consistency with the Act's requirements for preventing manipulation and ensuring fair trading. Deemed approvals occurred between October 24 and November 14, 2025. This follows precedents like the SEC's 2024 approvals for spot bitcoin ETFs, which opened doors for derivative products. Different viewpoints emerge: exchanges and industry groups view it as a step toward market innovation and liquidity, potentially attracting retail and institutional investors. Regulators and consumer advocates, however, highlight risks of volatility and manipulation in commodity markets, referencing cases like the 2010 Flash Crash or CFTC oversight of futures. Implications include expanded product offerings, which could boost trading volumes short-term, while long-term debates center on systemic risks to financial stability.
Retail Price Improvement Program Expansion
Cboe BYX Exchange filed on March 13, 2025, to modify Rule 11.24 by introducing an Enhanced Retail Price Improvement (RPI) Order and extending the program to securities priced below $1.00. The RPI program allows retail orders to receive better prices than the national best bid and offer through non-displayed liquidity.
Published on March 20, 2025, the proposal (SR-CboeBYX-2025-007) saw an amendment and proceedings, with a longer designation period ending in deemed approval on November 15, 2025. This builds on the program's initial approval in 2012 as a pilot to enhance retail executions, with extensions reflecting ongoing SEC evaluations. Supporters, including broker-dealers, argue it improves outcomes for retail investors, aligning with the Act's investor protection mandates. Opponents, such as some market makers, worry about fragmentation and reduced transparency. Short-term effects may include increased participation in sub-dollar stocks, while long-term implications could involve broader adoption across exchanges, potentially influencing retail trading costs.
Forward-Looking Conclusion
These deemed approvals underscore the SEC's reliance on procedural timelines to advance exchange innovations, balancing efficiency with oversight. Potential next steps include implementation by the exchanges, possibly with monitoring reports to the SEC, and opportunities for public challenges via petitions. Ongoing debates may focus on equity in market access, risks from new derivatives, and the effectiveness of retail protections, with future challenges arising from technological advancements or economic shifts.
