Notice2026-05762
Self-Regulatory Organizations; Cboe Exchange, Inc.; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Adopt Rule 8.23
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 25, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 57 (Wednesday, March 25, 2026)</title>
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[Federal Register Volume 91, Number 57 (Wednesday, March 25, 2026)]
[Notices]
[Pages 14613-14616]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05762]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105061; File No. SR-CBOE-2026-008]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Suspension of
and Order Instituting Proceedings To Determine Whether To Approve or
Disapprove a Proposed Rule Change To Adopt Rule 8.23
March 20, 2026.
I. Introduction
On January 20, 2026, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'')
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filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
adopt Exchange Rule (``Rule'') 8.23 to codify certain order and quote
entry and trading activity that is prohibited on the Exchange. The
proposed rule change was immediately effective upon filing with the
Commission pursuant to Section 19(b)(3)(A) of the Act.\3\ The proposed
rule change was published for comment in the Federal Register on
February 2, 2026.\4\ Pursuant to Section 19(b)(3)(C) of the Act,\5\ the
Commission is hereby: (1) temporarily suspending the proposed rule
change; and (2) instituting proceedings to determine whether to approve
or disapprove the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ See Securities Exchange Act Release No. 104721 (January 28,
2026), 91 FR 4645 (February 2, 2026) (SR-CBOE-2026-008) (Notice of
Filing of Proposed Rule Change to Adopt Rule 8.23) (``Notice'').
Comments received on the Notice are available on the Commission's
website at: <a href="https://www.sec.gov/rules-regulations/public-comments/sr-cboe-2026-008">https://www.sec.gov/rules-regulations/public-comments/sr-cboe-2026-008</a>.
\5\ 15 U.S.C. 78s(b)(3)(C).
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II. Background and Description of the Proposed Rule Change <SUP>6</SUP>
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\6\ For additional detail regarding the Exchange's proposal, see
the Notice, supra note 4.
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The Exchange proposes to adopt Rule 8.23, which would codify order
and quote entry and trading activity that the Exchange believes is
disruptive, and prohibited by the Act, the rules and regulations
thereunder, and the Exchange's Rules.\7\ The Exchange states that
Trading Permit Holders (``TPHs'') should be submitting all orders and
quotes at any time for the purpose of bona fide transactions or in good
faith for legitimate purposes.\8\
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\7\ See Notice, supra note 4, 91 FR at 4646.
\8\ Id.
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The Exchanges states that, as a national securities exchange
registered pursuant to Section 6 of the Act, it is required to be
organized and to have the capacity to enforce compliance by its members
and persons associated with its members, with the Act, the rules and
regulations thereunder, and its Rules.\9\ The Exchange also states that
its Rules are required to be ``designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade . . . and, in general, to protect investors and the
public interest.'' \10\ In addition, the Exchange states that Section
9(a)(1) of the Act prohibits any member of a national securities
exchange from engaging in certain activity for the purpose of creating
a false or misleading appearance of active trading.\11\ The Exchange
further states that Rule 10b-5 under the Act prohibits any act,
practice, or course of business which operates or would operate as a
fraud or deceit upon any person, in connection with the purchase or
sale of any security.\12\ Further, the Exchange states that various
Exchange Rules currently prohibit disruptive order and quote entry and
trading activity.\13\
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\9\ 15 U.S.C. 73f(b)(1); see Notice, supra note 4, 91 FR at
4646.
\10\ 15 U.S.C. 78f(b)(5); see Notice, supra note 4, 91 FR at
4646.
\11\ See Notice, supra note 4, 91 FR at 4646; and 15 U.S.C.
78i(a)(1).
\12\ See Notice, supra note 4, 91 FR at 4646; and 17 CFR
240.10b-5.
\13\ See Notice, supra note 4, 91 FR at 4646. For example, the
Exchange states that Rule 8.1 prohibits TPHs from engaging in acts
or practices inconsistent with just and equitable principles of
trade; Rule 8.2 prohibits TPHs from engaging in conduct in violation
of the Act, the rules and regulations thereunder, and Exchange
Rules; Rule 8.6 prohibits TPHs from engaging in market manipulation;
and Rule 8.10 prohibits TPHs from misusing material, nonpublic
information.
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The Exchange states that it has identified various activities that
may comprise disruptive order and quote entry or trading activity in
violation of its Rules and the Act, and that the proposal describes
what the Exchange considers to be prohibited activity.\14\
Specifically, proposed Rule 8.23(a) states that TPHs, on their own
behalf or on behalf of customers, must submit all orders and quotes at
any time for the purpose of executing bona fide transactions or in good
faith for legitimate purposes. Proposed Rule 8.23(a) also provides a
non-exhaustive list of non-bona fide or nonlegitimate purposes.\15\ The
Exchange views the activity identified in proposed Rule 8.23(a) as
currently prohibited by Exchange rules and consistent with activity the
Exchange has previously identified as being disruptive and violative of
its Rules.\16\
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\14\ See Notice, supra note 4, 91 FR at 4646. The Exchange
states that it has issued guidance through Regulatory Circulars to
identify examples of when behavior is disruptive and thus prohibited
by the Act or Exchange Rules. Id.; see also, e.g., Cboe Regulatory
Circular 22-014 (September 26, 2022), available at: RC22-014
Prearranged Trading and Signaling of Imminent Orders (<a href="http://cboe.com">cboe.com</a>); and
Cboe Regulatory Circular 22-008 (March 18, 2022), available at:
RC22-008 Quote and Order Messaging--Prohibited Activity (<a href="http://cboe.com">cboe.com</a>).
\15\ See Notice, supra note 4, 91 FR at 4646-47.
\16\ Id. See also supra note 14.
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Proposed Rule 8.23(b) describes various factors the Exchange may
consider when assessing whether conduct constitutes disruptive or
manipulative activity that violates proposed Rule 8.23. The Exchange
believes that these factors are consistent with the prohibited activity
described in proposed Rule 8.23(a) that, when considered in context,
supports whether there was requisite intent for the market
participant's conduct, for example, to induce another market
participant to engage in market activity.\17\ Proposed Rule 8.23(c)
provides that, absent other factors or circumstances, certain
activities do not constitute a violation of proposed Rule 8.23.\18\
Finally, the Exchange proposes to adopt interpretations and policies to
proposed Rule 8.23 that provide additional information relevant to the
determination whether certain activity is prohibited by Rule 8.23.\19\
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\17\ See Notice, supra note 4, 91 FR at 4647.
\18\ Id. at 4647-48.
\19\ Id. at 4648.
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III. Suspension of the Proposed Rule Change
Pursuant to Section 19(b)(3)(C) of the Act,\20\ at any time within
60 days of the date of filing of an immediately effective proposed rule
change pursuant to Section 19(b)(1) of the Act,\21\ the Commission
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') if it appears to the Commission that
such action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. A temporary suspension of the proposed rule changes is
necessary and appropriate to allow for additional analysis of the
proposed rule change's consistency with the Act and the rules
thereunder.
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\20\ 15 U.S.C. 78s(b)(3)(C).
\21\ 15 U.S.C. 78s(b)(1).
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Section 6(b)(5) of the Act requires the rules of an exchange to be
designed to prevent fraudulent and manipulative acts and practices,
promote just and equitable principles of trade, perfect the mechanism
of a free and open market and a national market system, protect
investors and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers; \22\
and Section 6(b)(8) of the Act requires that the rules of an exchange
not impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.\23\
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\22\ 15 U.S.C. 78f(b)(5).
\23\ 15 U.S.C. 78f(b)(8).
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In temporarily suspending the Exchange's proposed rule change, the
Commission intends to further consider
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whether the proposal is consistent with the statutory requirements
applicable to a national securities exchange under the Act. In
particular, the Commission will consider whether the proposed rule
change satisfies the standards set forth in Sections 6(b)(5) and
6(b)(8) of the Act.\24\ Therefore, the Commission finds that it is
appropriate in the public interest, for the protection of investors,
and otherwise in furtherance of the purposes of the Act, to temporarily
suspend the proposed rule change.\25\
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\24\ See 15 U.S.C. 78f(b)(5) and (8), respectively.
\25\ For purposes of temporarily suspending the proposed rule
change, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change
In addition to temporarily suspending the proposal, the Commission
also hereby institutes proceedings pursuant to Section 19(b)(2)(B) of
the Act \26\ to determine whether the proposed rule change should be
approved or disapproved. Institution of such proceedings is appropriate
at this time in view of comments received, and the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide
additional comment on the proposed rule change to inform the
Commission's analysis of whether to approve or disapprove the proposed
rule change.
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\26\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\27\ the Commission is
providing notice of the grounds for disapproval under consideration. As
described above, the Exchange has proposed to codify certain order and
quote entry and trading activity that is prohibited on the Exchange.
The Commission is instituting proceedings to allow for additional
analysis of, and input from commenters with respect to, the proposed
rule change's consistency with the Act, and in particular, Section
6(b)(5) of the Act, which requires, among other things, that the rules
of a national securities exchange be designed to prevent fraudulent and
manipulative acts and practices; promote just and equitable principles
of trade; protect investors and the public interest; and not permit
unfair discrimination between customers, issuers, brokers or dealers;
\28\ and Section 6(b)(8) of the Act, which requires that the rules of a
national securities exchange not impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act.\29\
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\27\ Id.
\28\ 15 U.S.C. 78f(b)(5).
\29\ 15 U.S.C. 78f(b)(8).
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Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization [`SRO'] that proposed the rule change.''
\30\ The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\31\ and any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Exchange Act and the applicable rules and
regulations.\32\
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\30\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
\31\ Id.
\32\ Id.
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For these reasons, the Commission believes it is appropriate to
institute proceedings pursuant to Section 19(b)(2)(B) of the Exchange
Act \33\ to determine whether the proposal should be approved or
disapproved.
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\33\ 15 U.S.C. 78s(b)(2)(B).
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V. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their data, views, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposed rule change
is consistent with Sections 6(b)(5) and 6(b)(8) of the Act \34\ or any
other provision of the Act, or the rules and regulations thereunder.
Although there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of data,
views, and arguments, the Commission will consider, pursuant to Rule
19b-4 under the Act,\35\ any request for an opportunity to make an oral
presentation.\36\
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\34\ 15 U.S.C. 78f(b)(5); 15 U.S.C. 78f(b)(8).
\35\ 17 CFR 240.19b-4.
\36\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants to
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by a self-
regulatory organization. See Securities Acts Amendments of 1975,
Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75,
94th Cong., 1st Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by April 15, 2026. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
April 29, 2026. The Commission asks that commenters address the
sufficiency of the Exchange's statements in support of the proposal, in
addition to any other comments they may wish to submit about the
proposed rule change. Comments may be submitted by any of the following
methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7"><span class="__cf_email__" data-cfemail="2654534a430b45494b4b434852556655434508414950">[email protected]</span></a>. Please include
file number SR-CBOE-2026-008 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-CBOE-2026-008. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-CBOE-2026-008 and should be submitted on
or before April 15, 2026.
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(57) and (58).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-05762 Filed 3-24-26; 8:45 am]
BILLING CODE 8011-01-P
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