Item 3. Legal Proceedings

Cboe incorporates herein by reference the discussion set forth in Note 21 ("Income Taxes") and Note 23 ("Commitments, Contingencies, and Guarantees") of the consolidated financial statements included herein.

Equity Access Fees Cap Challenge

In December 2022, the SEC released four equity market structure proposals, including one concerning Regulation NMS Amendments: Tick Size, Access Fees, and Transparency. On October 8, 2024, the SEC promulgated Final Rules concerning Reg NMS to amend the minimum pricing increments for the quoting of certain NMS stocks, reduced the access fee caps and enhance the transparency of better priced orders (“Final Rules”). Among other things, the Final Rules reduce the access fee cap from $0.30 per 100 shares to $0.10 per 100 shares.

On October 30, 2024, the Company and the Company’s equities exchanges, BZX, BYX, EDGX, and EDGA (collectively, the “Cboe equity exchanges”) and Nasdaq, Inc. filed a Petition for Review (“PFR”) in the Court of Appeals for the D.C. Circuit (the “D.C. Circuit”) appealing the Final Rules. On December 3, 2024, the Cboe equity exchanges and Nasdaq, Inc. filed a request with the SEC for a stay to delay the initial implementation date of the Final Rules, which was scheduled to occur in November 2025. On December 12, 2024, the SEC granted a stay of the challenged provision of the Final Rules until the litigation is resolved. Merits briefing will conclude at the beginning of the second quarter of 2025.

The Final Rules, amongst other things, are expected to reduce access fee caps to a level that may inhibit our ability to incentivize liquidity on our U.S. equities exchanges, thereby resulting in a reduction in transaction fee revenue, as well as limit our ability to differentiate our fee schedule and compete with other national securities exchanges and off-exchange venues, which may have a material impact on our business, financial condition, and operating results. The Company and the Cboe equity exchanges intend to litigate the matter vigorously.

OEMS Disapproval Order Challenge

On February 13, 2024, Cboe Exchange, Inc. (“Cboe”) filed a proposal to adopt a new rule regarding order and execution management systems (“OEMS”). The proposed new rule provided that an exchange-affiliated OEMS that satisfies criteria (designed to ensure the OEMS is acting independently from the exchange) is not a facility of the exchange, and therefore not subject to the rule filing requirements of Section 19(b) of the Securities Exchange Act of 1934. The objective of the proposed rule was to improve competition within the OEMS market and ultimately benefit investors.

On October 31, 2024, the SEC issued an order disapproving Cboe’s proposal. On December 26, 2024, Cboe filed a Petition for Review (“PFR”) of the SEC’s disapproval order in the Court of Appeals for the Seventh Circuit (the “7th Circuit”). The Company and Cboe intend to litigate the matter vigorously.