Notice2026-06154
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Apply Its Wide Market Protection Mechanism on a Trading Session-By-Trading Session Basis
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 31, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 61 (Tuesday, March 31, 2026)</title>
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[Federal Register Volume 91, Number 61 (Tuesday, March 31, 2026)]
[Notices]
[Pages 16036-16038]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06154]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105098; File No. SR-CBOE-2026-027]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Apply
Its Wide Market Protection Mechanism on a Trading Session-By-Trading
Session Basis
March 26, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 20, 2026, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 5.34(a)(5) to permit the
Exchange to apply its wide market protection mechanism on a trading
session-by-trading session basis.\3\ The text of the proposed rule
change is also available on the Commission's website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>), the Exchange's website (<a href="https://www.cboe.com/us/options/regulation/rule_filings/bzx/">https://www.cboe.com/us/options/regulation/rule_filings/bzx/</a>), and at the
principal office of the Exchange.
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\3\ The term ``trading session'' means the hours during which
the Exchange is open for trading for Regular Trading Hours, Global
Trading Hours or Curb Trading Hours (each of which may referred to
as a trading session), each as set forth in Rule 5.1. Unless
otherwise specified in the Rules or the context otherwise indicates,
all Rules apply in the same manner during each trading session. See
Rule 1.1.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this rule filing is to amend Rule 5.34(a), Order and
Quote Price Protection Mechanisms and Risk Controls (Simple Orders).
Specifically, the Exchange proposes changes to the wide market
protection mechanism set forth in Rule 5.34(a)(5). By way of
background, the wide market protection mechanism is designed to reduce
the risk of orders executing at extreme or adverse prices when the NBBO
is determined to be wide. The wide market protection mechanism
leverages the Exchange's iterative drill-through protection mechanism
for certain orders when the NBBO is wide and initiates a drill-through
pause on applicable inbound market or limit orders or elected Stop
(Stop-Loss) \4\ or Stop-Limit \5\ orders which would either execute or
post to the Book \6\ at potentially extreme prices. Current Rule
5.34(a)(4)(B) provides that the wide
[[Page 16037]]
market protection mechanism applies during all trading sessions except
for a predetermined amount of time prior to the close of the RTH and
Curb trading sessions (such time will be determined by the Exchange).
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\4\ A ``Stop (Stop-Loss)'' order is an order to buy (sell) that
becomes a market order when the consolidated last sale price
(excluding prices from complex order trades if outside of the NBBO)
or NBB (NBO) for a particular option contract is equal to or above
(below) the stop price specified by the User. Users may not
designate a Stop Order as All Sessions. Users may not designate bulk
messages as Stop Orders. A User may not designate a Stop order as
Direct to PAR. See Rule 5.6(c) (definition of ``Stop (Stop-Loss)''
order).
\5\ A ``Stop-Limit'' order is an order to buy (sell) that
becomes a limit order when the consolidated last sale price
(excluding prices from complex order trades if outside the NBBO) or
NBB (NBO) for a particular option contract is equal to or above
(below) the stop price specified by the User. A User may not
designate a Stop-Limit Order as All Sessions or RTH and Curb. Users
may not designate bulk messages as Stop-Limit Orders. A User may not
designate a Stop-Limit order as Direct to PAR. See Rule 5.6(c)
(definition of ``Stop-Limit'' order).
\6\ ``Book'' means the electronic book of simple orders and
quotes maintained by the System, which single book is used during
both the regular trading hours and global trading hours trading
sessions. See Rule 1.1 (definition of, ``Book'').
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Pursuant to current Rule 5.34(a)(5)(D), the Exchange may apply the
wide market protection mechanism on a class-by-class basis. The
Exchange proposes to amend current Rule 5.34(a)(4)(D) \7\ to permit the
Exchange to apply the wide market protection mechanism on a trading
session-by-trading session basis as well. As part of the proposed
change, the Exchange proposes to delete current Rule 5.34(a)(4)(B) and
add to current Rule 5.34(a)(4)(D) language contained within Rule
5.34(a)(4)(B), which provides that the wide market protection mechanism
will not apply during a predetermined amount of time prior to the close
of the RTH and Curb trading sessions (such time will be determined by
the Exchange).
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\7\ As part of the proposed change, the Exchange proposes to
amend current Rules 5.34(a)(4)(C) and (D) to Rules 5.34(a)(4)(B) and
(C), respectively.
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Finally, the Exchange proposes to amend Rule 5.34(a)(5)(A)(i).
Currently, Rule 5.34(a)(5)(A)(i) states that for purposes of the wide
market protection mechanism, the NBBO is ``wide'' if there is no NBO or
the width of the NBBO for the series is equal to or greater than an
amount the Exchange determines on a class-by-class basis and which is
applied based on the NBB; the Exchange proposes to amend this provision
to provide that the Exchange-determined amount may also be determined
on a trading session-by-trading session basis.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\8\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \9\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
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In particular, the Exchange believes the proposed rule change will
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, protect
investors. In general, the wide market protection is designed to
protect market participants from executing transactions at potentially
extreme prices. The proposed change to permit the Exchange to apply its
wide market protection mechanism on a trading session-by-trading
session basis is designed to better tailor the protection in a way that
better reflect the trading environment of each trading session.
The Exchange believes the proposed change to apply the wide market
protection on a trading session-by-trading session basis is reasonable,
because, similar to trading in different classes, trading in different
trading sessions may result in different trading considerations due,
for example, to different trading characteristics, liquidity profiles,
and market conditions. The proposal will provide the Exchange with
flexibility to apply wide market protections in a manner which accounts
for these differences across trading sessions, thereby enhancing
investor protection while minimizing unnecessary market disruption.
Similarly, the Exchange believes the proposal to amend the wide
market protection mechanism rules to provide that the Exchange-
determined amount used in ascertaining whether the NBBO is wide may
vary by trading session is reasonable. The Exchange believes the
proposed change will allow it to more precisely tailor the wide market
mechanism in a way that considers the trading characteristics of each
class within each trading session. Permitting the Exchange to calibrate
the wide market mechanism on a class-by-class and/or trading session-
by-trading session basis provides the Exchange with flexibility
necessary to account for the full range of trading characteristics and
market conditions that may vary across both classes and trading
sessions.
The Exchange also believes the proposed change to contain all
information regarding the applicability of wide market protection
mechanism as it relates to trading sessions within a singular provision
is reasonable, as it will bring transparency and clarity to the
rulebook, to the benefit of investors.
Finally, the Exchange believes the proposed changes are not
unfairly discriminatory, as wide market protection will apply uniformly
to all applicable orders in a trading session in the same manner.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act The Exchange does not believe
that the proposed rule change will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because the proposed change will apply uniformly to
all applicable orders in a trading session in the same manner. This
approach is consistent with the Exchange's existing practice of
applying the wide market mechanism on a class-by-class basis, where
product characteristics may warrant differential treatment in regard to
risk protections.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as the proposed
rule change relates specifically to price protections offered on the
Exchange and which orders are subject to the price protection
mechanism.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ thereunder.
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has
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become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and
Rule 19b-4(f)(6) \14\ thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. 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#3143445d541c525e5c5c545f4542714254521f565e47"><span class="__cf_email__" data-cfemail="552720393078363a3838303b2126152630367b323a23">[email protected]</span></a>. Please include
file number SR-CBOE-2026-027 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-2026-027. 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-2026-027 and should be submitted on
or before April 21, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-06154 Filed 3-30-26; 8:45 am]
BILLING CODE 8011-01-P
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