Cboe C2 Exchange adopts Step Up Mechanism rule with immediate effect
The rule, filed under Release No. 34-106224 and File No. SR-C2-2026-024, becomes effective immediately and applies to all C2 trading participants.
On August 27, 2026, Cboe C2 Exchange, Inc. filed a proposed rule change with the Securities and Exchange Commission pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4. The filing, identified as Release No. 34-106224 and File No. SR-C2-2026-024 (FR Doc No. 2026-17913), is being published to solicit comments and is effective immediately.
The proposal adopts a new Rule 5.35, titled "Step Up Mechanism (SUM)," which establishes eligibility criteria for orders, including order size, type, capacity, and designated classes. Eligible orders that are marketable against the Exchange's best bid or offer (BBO) but not the national best bid or offer (NBBO), or that would improve the BBO, will be automatically processed. Users may opt out of SUM on an order-by-order basis or via a port setting. The exposure period for a SUM-eligible order is limited to one second, with the Exchange intending to set the exposure length to ten milliseconds for all classes.
Conforming amendments are proposed to Rules 5.21, 5.25, and 5.34, including a correction of a typographical error in Rule 5.25(c) from "subpargraph" to "subparagraph." Rule 5.21(b)(2) will reference SUM's operation during limit up-limit down states, and Rule 5.25(c) will add a reference to the new mechanism.
The Exchange states that SUM is designed to allow market participants to "step up" to the NBBO, improving execution probabilities on the C2 venue and adding liquidity that can interact with incoming orders. The mechanism also enables participants to consider factors such as execution costs, system reliability, and quality of service when routing orders.
Further reading