# Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.34 To Adopt a Wide Market Protection Mechanism
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 November 19, 2025, 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.
[^1] 15 U.S.C. 78s(b)(1).
[^2] 17 CFR 240.19b-4.
**I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change**
The Exchange proposes to amend Rule 5.34 to adopt a wide market protection mechanism designed to reduce the risk of orders executing at extreme or adverse prices when the national best bid and offer (“NBBO”) is determined to be wide. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Commission's website ( *https://www.sec.gov/rules/sro.shtml* ), the Exchange's website ( *https://www.cboe.com/us/options/regulation/rule_filings/bzx/* ), and at the principal office of the Exchange.
**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), to adopt a wide market protection mechanism designed to reduce the risk of orders executing at extreme or adverse prices when the NBBO is determined to be wide. [^3] The proposed wide market protection mechanism will leverage the existing iterative drill-through protection mechanism for certain orders when the NBBO is wide and will initiate 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.
[^3] The Exchange notes it currently has a Market Order NBBO Width Protection Mechanism set forth in Rule 5.34(a)(2); the proposed rule change does not result in changes to the Market Order NBBO Width Protection Mechanism, which is infrequently triggered. In general, the current Market Order NBBO Width Protection Mechanism applies when the NBBO is significantly wider than will be considered under the proposed wide market protection mechanism. Further, the Market Order NBBO Width Protection is applicable only to market orders and does not apply to Stop (Stop-Loss) orders. The proposed wide market protection mechanism is applicable to market and limit orders (subject to certain exceptions), and is intended to “catch” more orders. Unlike the Market Order NBBO Width Protection Mechanism, which cancels orders too far outside the NBBO, the proposed mechanism will trigger the drill-through process for applicable orders and thus provide additional execution opportunities.
[^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”).
Drill-through price protection is currently described in Exchange Rule 5.34(a)(4). Under Rule 5.34(a)(4)(A), if a buy (sell) order enters the Book at the conclusion of the opening auction process or would execute or post to the Book when it enters the Book, the System [^7] executes the order up (down) to a buffer amount (the Exchange determines the buffer amount on a class and premium basis) above (below) the offer (bid) limit of the Opening Collar [^8] or the National Best Offer (“NBO”) (National Best Bid (“NBB”)) that existed at the time of order entry, respectively (the “drill-through price”). [^9]
[^7] “System” means the Exchange's hybrid trading platform that integrates electronic and open outcry trading of option contracts on the Exchange and includes any connectivity to the foregoing trading platform that is administered by or on behalf of the Exchange, such as a communications hub. *See* Rule 1.1 (definition of, “System”).
[^8]*See* Rule 5.31(a) for the definition of Opening Collars.
[^9]*See* Rule 5.34(a)(4)(A).
Rule 5.34(a)(4)(C) establishes an iterative drill-through process, whereby orders will rest in the Book for multiple time periods and at more aggressive displayed prices during each time period. [^10] Specifically, for a market order with a Time-in-Force of Day or a limit order (or unexecuted portion) with a Time-in-Force of Day, Good-til-Cancelled (“GTC”), or Good-til-Date (“GTD”), the System enters the order in the Book with a displayed price equal to the drill-through price. The order (or unexecuted portion) will rest in the Book at the drill-through price for the duration of consecutive time periods (the Exchange determines on a class-by-class basis the length of the time period in milliseconds, which may not exceed three seconds) (each time period is referred to as an “iteration”). [^11] Following the end of each period, the System adds (if a buy order) or subtracts (if a sell order) one buffer amount (the Exchange determines the buffer amount on a class-by-class basis) to the drill-through price displayed during the immediately preceding period (each new price becomes the “drill-through price”). [^12] The order (or unexecuted portion) rests in the Book at that new drill-through price for the duration of the subsequent period. The System applies a timestamp to the order (or unexecuted portion) based on the time it enters or is re-priced in the Book for priority reasons. The order continues through this iterative process until the earliest of the following to occur: (a) the order fully executes; (b) the User [^13] cancels the order; or (c) the buy (sell) order's limit price equals or is less (greater) than the drill-through price at any time during application of the drill-through mechanism, in which case the order rests in the Book at its limit price, subject to a User's instructions.
[^10] The Exchange will announce to Trading Permit Holders the buffer amount and the length of the time periods in accordance with Rule 1.5. The Exchange notes that each time period will be the same length (as designated by the Exchange), and the buffer amount applied for each time period will be the same.
[^11]*See* Rule 5.34(a)(4)(C).
[^12]*See* Rule 5.34(a)(4)(C).
[^13] The term “User” shall mean any Trading Permit Holder or Sponsored User who is authorized to obtain access to the System pursuant to Rule 5.5.
Currently, there are common scenarios in which certain orders are trading at prices that are, for reasons described below, artificially wide. For example, certain trading strategies result in a significant number of simple Stop (Stop-Loss) and Stop-Limit orders resting in the Book and then being triggered simultaneously by a common event. The receipt of large quantities of market and limit orders on the same side of a series results in rapid removal of liquidity without opportunity for replenishment (and potential related triggers of risk protections). This results in potentially extreme or adverse execution prices as risk is re-evaluated by Market-Makers and quotes are replenished, typically within seconds of the start of the triggering event. Additionally, the Exchange has observed an increase in resting Stop (Stop-Loss) or Stop-Limit orders that are simultaneously triggered around the opening of the relevant trading session and trading at extremely wide price levels, up to Obvious Error prices. Similarly, Stop (Stop-Loss) and Stop-Limit orders may be triggered on a trade (rather than an NBBO update) that exhausts liquidity, causing the triggered order(s) to execute at the next available bid/offer, which may be at an extreme level, rather than affording the order the benefit of drill-through price protection by displaying the order at the price of the triggering trade and iterating from there.
The Exchange now proposes rule changes designed to prevent trades at extreme or adverse price levels in such scenarios, when quotes are wide or when orders are removing liquidity in rapid succession. The Exchange proposes to amend Rule 5.34 to add a wide market protection mechanism that will leverage the existing iterative drill-through protection mechanism for certain orders when the NBBO is considered “wide” and will initiate a drill-through pause on applicable near-marketable inbound market or limit orders or elected Stop (Stop-Loss) or Stop-Limit orders which would either execute or post to the Book at potentially extreme or adverse prices.
Specifically, the Exchange proposes to add new Rule 5.34(a)(5) to establish a wide market protection mechanism. Under proposed Rule 5.34(a)(5)(A), if (i) when the NBBO is “wide,” the System receives a buy (sell) order with a price that is more than a buffer amount above (below) the NBB (NBO) or (ii) a Stop (Stop-Loss) or Stop-Limit buy (sell) order is triggered and is priced more than a buffer amount above (below) the NBB (NBO) and the NBBO after the triggering event is “wide,” the order enters the Book and is displayed at the Benchmark Price for an Exchange determined-amount of time (this time period will be considered the first drill-through iteration pursuant to Rule 5.34(a)(4)). If the order does not execute or there is any remaining size of the order following a partial execution, the order will continue the drill-through process pursuant to Rule 5.34(a)(4).
As set forth in proposed Rule 5.34(a)(5)(A), for purposes of the proposed subparagraph (5), 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. Further, for a buy (sell) order, the Benchmark Price is the least aggressive price of (1) the NBB (NBO) plus (minus) a buffer amount determined by the Exchange on a class and premium basis; [^14] (2) the last trade price, if greater (less) than or equal to the NBB (NBO); [^15] or (3) the midpoint of the then-current NBBO. Consider the below examples.
[^14] In a no-bid scenario for buy orders, the NBB will be considered as zero and the Benchmark Price will be calculated accordingly. In a no-offer scenario for sell orders, the NBO will not be used; the Benchmark Price will use the less aggressive of the last trade price or the NBB plus the buffer amount determined by the Exchange on a class-by-class basis.
[^15] If last trade price is worse than the NBO (NBB) it will not be used as a possible Benchmark Price.
**Example #1, Demonstrating Eligibility of a Stop-Limit Order for Wide Market Protection**
In this example, a buy Stop-Limit order is triggered, the NBBO after the triggering event is determined to be wide, and the limit price is more than a buffer amount above the NBB. Under the proposed rules, the order will be paused at the Benchmark Price and begin drill-through iteration. Assume for purposes of this example, the market will be considered wide pursuant to proposed Rule 5.34(a)(5)(A)(i) if the width of the NBBO for the series is equal to or greater than $1.50. Further assume for this example, the buffer amount to determine limit order eligibility based on price is 80% of the width of NBBO.
Order 1: Stop-Limit Buy 5 contracts @3.33, Stop Price = $2.30
MM1 Quote: 5 @1.95 x 5 @3.65
MM2 Quote: 5 @1.95 x 5 @2.30 (NBBO, not wide)
Order 2: Buy 5 @2.30
Order 2 trades with MM2 Quote at 2.30; as a result, Order 1 is elected.
The resulting NBBO after the triggering event is 1.95 x 3.65 ( *i.e.,* NBBO width equal to $1.70), which is considered wide, and Order 1 is triggered with a limit price of $3.33, which is greater than the Exchange-determined buffer amount above the NBB ( *i.e.,* NBB of 1.95 + (NBBO width of 1.70 x 0.80 buffer) = 3.31). Thus, Order 1 is subject to the wide market protection mechanism.
**Example #2, Demonstrating Determination of Benchmark Price**
In this example, a buy Stop (Stop-Loss) order is triggered by a quote, the NBBO after the triggering event is determined to be wide, and the price is more than a buffer amount above the NBB. Under the proposed rules, the order will be paused at the Benchmark Price and begin drill-through iteration. Assume for purposes of this example, the market will be considered wide pursuant to proposed Rule 5.34(a)(5)(A)(i) if the width of the NBBO for the series is equal to or greater than $1.50. Further assume for this example, the buffer amount to determine the order eligibility based on price is 80% of the width of NBBO and the buffer amount used in determining Benchmark Price is 0.75.
Order 1: Stop (Stop-Loss) Buy 5 @3.40, Stop Price = $2.00
MM1 Quote: 5 @1.95 x 5 @3.75
MM2 Quote 5 @1.95 x 5 @2.30 (NBBO, not wide)
Order 2: Buy 5 @2.30
Order 2 trades with MM2 Quote at 2.30; as a result, Order 1 is elected.
The resulting NBBO after the triggering event is 1.95 x 3.75 ( *i.e.,* NBBO width equal to $1.80), which is considered wide, and Order 1 is triggered with a price of $3.40, which is greater than the Exchange-determined buffer amount above the NBB ( *i.e.,* NBB of 1.95 + (NBBO width of 1.80 x 0.80 buffer) = 3.39). Thus, Order 1 is subject to the wide market protection mechanism. The Benchmark Price is 2.30, determined as the least aggressive of:
• The NBB (1.95) plus a buffer amount determined by the Exchange on a class and premium basis (0.75): 2.70
• Last Trade Price: 2.30
• The midpoint of the then-current NBBO: 2.85
Thus, executions of Order 1 up to $2.30 will be considered the initial drill-through iteration, as the order becomes subject to the drill-through price protection mechanism under Rule 5.34(a)(4)(C).
The Exchange proposes to add Rule 5.34(a)(5)(B) to specify that the wide market protection mechanism applies during all trading sessions, except for a pre-determined amount of time prior to the close of the Regular Trading Hours (“RTH”) [^16] and Curb [^17] trading sessions (such time will be determined by the Exchange). [^18] This provides a final opportunity for market participants to utilize Stop (Stop-Loss) and Stop-Limit orders to exit positions if desired at the end of the trading session, in order to avoid unintended overnight risk. [^19]
[^16] RTH for transactions in equity options (including options on individual stocks, ETFs, ETNs, and other securities) are the normal business days and hours set forth in the rules of the primary market currently trading the securities underlying the options, except for options on ETFs, ETNs, Index Portfolio Shares, Index Portfolio Receipts, and Trust Issued Receipts the Exchange designates to remain open for trading beyond 4:00 p.m. Eastern Time (ET) but in no case later than 4:15 p.m. ET. RTH for transactions in index options are from 9:30 a.m. to 4:15 p.m. ET, subject to certain exceptions.
[^17] The Curb session begins at 4:15 p.m. and goes until 5:00 p.m. on Monday through Friday.
[^18] During this time, the drill-through process will not be initiated by the wide market protection mechanism, but may still apply pursuant to Rule 5.34(a)(4).
[^19] The Exchange notes that Rule 6.5(c), Obvious Errors, will continue to apply as it does today; there are no changes to the Obvious Error rules as a result of the proposed rule change.
The Exchange proposes to add Rule 5.34(a)(5)(C), which states that if an order would initiate the wide market protection while the drill-through process in the applicable series is in progress pursuant to Rule 5.34(a)(4), then the System does not initiate the wide market protection and instead the order would join the ongoing drill-through as set forth in Rule 5.34(a)(4)(C)(iv). The Exchange also proposes to add Rule 5.34(a)(5)(D) to exclude bulk messages, Intermarket Sweep Orders (“ISOs”), Immediate-or-Cancel orders (“IOCs”), and M and N capacity [^20] orders with a Time-in-Force of Day [^21] from the wide market protection mechanism; and to note that the Exchange may apply the wide market protection on a class-by-class basis.
[^20]*See* Rule 1.1 (definition of “Capacity”).
[^21] The Exchange notes that while M and N capacity orders with a Time-in-Force of Day are excluded from the wide market protection mechanism, they may separately be subject to the drill-through price protection mechanism, as applicable.
The Exchange also proposes to amend Rule 5.34(a)(1)(A)(ii) [^22] to exclude from the current protections for market orders in no-bid series certain orders that would be otherwise subject to wide market protection under the proposed rule changes. Currently, under Rule 5.34(a)(1)(A)(ii), if the System receives a sell market order in a series after it is open for trading with an NBB of zero, and the NBO in the series is greater than $0.50, the System cancels or rejects the market order, or routes the market order to PAR for manual handling, subject to a User's instruction, except if a drill-through process (described in subparagraph (a)(4)) is in progress for sell orders in the series and the sell market order would be subject to the drill-through protection, then the order joins the ongoing drill-through process in the then-current iteration and at the then-current drill-through price, regardless of NBBO. The Exchange proposes to amend Rule 5.34(a)(1)(A)(ii) to note that in the event the System receives a sell market order in a series after it is open for trading with an NBB of zero and the NBO in the series is greater than $0.50, if the order is subject to wide market protection pursuant to proposed subparagraph (a)(5), then the order enters the Book and is displayed at the Benchmark Price for an Exchange determined-amount of time (this time period will be considered the first drill-through iteration pursuant to subparagraph (a)(4)), with any remaining size continuing the drill-through process pursuant to subparagraph (a)(4).
[^22] The Exchange also proposes a non-substantive change to correct a typographical error within Rule 5.34(a)(1)(A)(ii), to change “expect” to “except.”
Finally, the Exchange proposes to amend Rule 5.34(a)(1)(B) to exclude from the current protections for market orders in no-offer series certain orders that would be otherwise subject to wide market protection under the proposed rule changes or drill-through protections pursuant to current Rule 5.34(a)(4). Currently under Rule 5.34(a)(1)(B), if the System receives a buy market order in a series after it is open for trading with an NBO of zero, the System cancels or rejects the market order. The Exchange proposes to amend Rule 5.34(a)(1)(B) to note that in the event the System receives a buy market order in a series after it is open for trading with an NBO of zero, if the order is subject to wide market protection pursuant to proposed subparagraph (a)(5), then the order enters the Book and is displayed at the Benchmark Price for an Exchange determined-amount of time (this time period will be considered the first drill-through iteration pursuant to subparagraph (a)(4)), with any remaining size continuing the drill-through process pursuant to subparagraph (a)(4); or if a drill-through process (described in current subparagraph (a)(4)) is in progress for buy orders in the series and the buy market order would be subject to the drill-through protection, then the order joins the ongoing drill-through process in the then-current iteration and at the then-current drill-through price, regardless of NBBO.
**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. [^23] Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) [^24] 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) [^25] requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
[^23] 15 U.S.C. 78f(b).
[^24] 15 U.S.C. 78f(b)(5).
[^25]*Id.*
In particular, the Exchange believes the proposed rule change to implement a wide market protection mechanism will remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors, because it will provide applicable orders with additional and consistent execution opportunities and price protections. As noted above, the wide market protection mechanism is effectively an extension of the Exchange's current drill-through price protection, of which the primary purpose is to prevent orders from executing at prices “too far away” from the market when they enter the Book for potential execution. The Exchange believes the proposed rule change is consistent with this purpose, because Users who submit applicable orders or have orders triggered in markets that are wider than expected, possibly due to wide quotes or orders removing liquidity in rapid succession, will receive price protection against execution at potentially extreme or adverse prices and additional execution opportunities.
Further, the proposed rule change to leverage the existing iterative drill-through protection mechanism for certain orders when the NBBO is considered “wide” allows these orders to receive the same level of price protection as other orders otherwise subject to the drill-through process. The proposed rule change will allow orders in wide markets additional execution opportunities while continuing to protect them against execution at potentially extreme prices, by providing the opportunity for execution at reasonable prices by allowing for liquidity replenishment that may result in more aggressive prices, especially during times when liquidity may require additional time to replenish, such as near the beginning of a trading session.
The Exchange believes the proposal will enhance risk protections, the individual firm benefits of which flow downstream to counterparties both at the Exchange and at other options exchanges, which increases systemic protections as well. The Exchange believes enhancing risk protections will allow Users to enter orders, including Stop (Stop-Loss) and Stop-Limit orders, and quotes with further reduced fear of inadvertent exposure to excessive risk, which will benefit investors through increased exposure to liquidity for the execution of their orders.
The Exchange also believes the proposed changes regarding the application of the wide market protection mechanism during Exchange trading sessions will protect investors, as the proposed application allows market participants a final opportunity to utilize Stop (Stop-Loss) and Stop-Limit orders to exit positions if desired at the end of the relevant trading session, in order to avoid unintended overnight risk. Further, the proposed changes add transparency to the rules regarding the wide market protection functionality and provide greater certainty as to the application of the process.
Additionally, the Exchange believes changes to specifically exclude bulk messages, ISOs, and IOCs from the wide market protection mechanism (similar to the drill-through price protection mechanism) is reasonable and appropriate, given the iterative pricing process would be inconsistent with the orders instruction (and thus the user's intent). Further, the Exchange believes the proposed change to exclude M and N capacity orders with a Time-in-Force of Day from the wide market protection is reasonable, as Market-Makers are positioned to observe and subsequently address wide market scenarios, by tightening the NBBO with an order or quote.
The Exchange also believes the proposed change to clarify that the System will not initiate the wide market protection while a drill-through process in the applicable series is in progress is reasonable, as it will bring transparency and clarity to the rulebook regarding how the wide market protection mechanism interacts with the drill-through price protection mechanism, to the benefit of investors. This proposed change is consistent with current drill-through functionality, where incoming orders that enter the Book while the drill-through is in progress and that would be subject to the drill-through protection join the on-going drill-through process. [^26]
[^26]*See* Rule 5.34(a)(4)(iv).
Additionally, the Exchange believes changes to specifically exclude from the current protections for market orders in no-bid (offer) series certain orders that would otherwise be subject to wide market protection will remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors. Specifically, the Exchange believes the change to exclude from the current protections for market orders in no-bid (offer) series certain orders that would otherwise be subject to wide market protection may allow opportunity for execution than if they were immediately canceled or rejected. This proposed rule change may increase execution opportunities for Users that submit sell market orders with an NBB of zero when the NBO in the series is greater than $0.50 (in the case of market orders in no-bid series protections) or buy market orders with an NBO of zero while still providing protection against executions at potentially erroneous prices. Similarly, the Exchange believes the change to allow buy market orders received by the System when the NBO is zero to be subject to the drill-through process is reasonable, as it may allow opportunity for execution of such orders, rather than if they were immediately canceled or rejected. This change aligns market order in no-bid (offer) series protection for Users that submit sell market orders with an NBB of zero when the NBO in the series is greater than $0.50 (in the case of market orders in no-bid series protections) with how the Exchange will handle buy market orders with an NBO of zero.
Finally, the Exchange believes the proposed change to apply the wide market protection on a class-by-class basis is reasonable, as classes may have different trading characteristics or may be affected differently by market conditions. The proposal will provide the Exchange with flexibility to apply wide market protections in a manner which accounts for material differences across option classes, thereby enhancing investor protection while minimizing unnecessary market disruption. Further, the Exchange believes the proposed changes are not unfairly discriminatory, as wide market protection applies uniformly to all market participants within each class. This approach is consistent with the Exchange's existing practice of applying certain other order and quote price protection and risk controls, such as the limit order fat finger check for simple orders, [^27] on a class-by-class basis where product characteristics warrant differential treatment in regard to risk protections.
[^27]*See* Rule 5.34(c)(1)(A).
**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 wide market protection functionality will apply to all applicable orders in a class in the same manner. Additionally, it will provide the same price protection and execution opportunities to relevant orders that are currently provided to orders that are subject to the drill-through price protection process, as the wide market protection mechanism is effectively an extension of the Exchange's current drill-through price protection. As noted above, the Exchange believes it is not unfairly discriminatory to apply this protection on a class-by-class basis, as wide market protection applies uniformly to all market participants within each class. This approach is consistent with the Exchange's existing practice of applying certain other order and quote price protection and risk controls, such as the limit order fat finger check for simple orders, [^28] on a class-by-class basis where product characteristics warrant differential treatment in regard to risk protections.
[^28]*See* Rule 5.34(c)(1)(A).
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 how the System handles orders as part of these price protection mechanisms. The proposed wide market protection mechanism expands the current drill-through price protection mechanism and provides relevant orders with improved protection against execution at potentially extreme or adverse prices through drill-through price protection.
The Exchange believes the proposed rule change would ultimately provide all market participants with additional execution opportunities when appropriate while providing protection from extreme or adverse execution. The Exchange believes the proposal will enhance risk protections, the individual firm benefits of which flow downstream to counterparties both at the Exchange and at other options exchanges, which increases systemic protections as well. The Exchange believes enhancing risk protections will allow Users to enter orders, including Stop (Stop-Loss) and Stop-Limit orders, and quotes with further reduced fear of inadvertent exposure to excessive risk, which will benefit investors through increased exposure to liquidity for the execution of their orders. Without adequate risk management tools, Trading Permit Holders could reduce the amount of order flow and liquidity they provide. Such actions may undermine the quality of the markets available to customers and other market participants. Accordingly, the proposed rule change is designed to encourage Trading Permit Holders to submit additional order flow and liquidity to the Exchange. The proposed change may similarly provide additional execution opportunities, which further benefits liquidity, especially during times when liquidity may require additional time to replenish, such as near the beginning of a trading session.
**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 [^29] and Rule 19b-4(f)(6) [^30] 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 become effective pursuant to Section 19(b)(3)(A) of the Act [^31] and Rule 19b-4(f)(6) [^32] thereunder.
[^29] 15 U.S.C. 78s(b)(3)(A).
[^30] 17 CFR 240.19b-4(f)(6).
[^31] 15 U.S.C. 78s(b)(3)(A).
[^32] 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.
A proposed rule change filed under Rule 19b-4(f)(6) [^33] normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii), [^34] the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposed rule change may become operative immediately upon filing. The Exchange believes waiver of the operative delay is consistent with the protection of investors and the public interest because it will allow the Exchange to more expeditiously implement the proposed changes which will provide applicable orders with improved protection against execution at potentially extreme or adverse prices via the wide market protection mechanism. For these reasons, and because the proposed rule change does not raise any novel legal or regulatory issues, the Commission finds that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change to be operative upon filing. [^35]
[^33] 17 CFR 240.19b-4(f)(6).
[^34] 17 CFR 240.19b-4(f)(6)(iii).
[^35] For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f).
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**
• Use the Commission's internet comment form ( *https://www.sec.gov/rules/sro.shtml* ); or
• Send an email to *[email protected].* Please include file number SR-CBOE-2025-081 on the subject line.
**Paper Comments**
• 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-2025-081. 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 ( *https://www.sec.gov/rules/sro.shtml* ). 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-2025-081 and should be submitted on or before December 19, 2025.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. [^36]
[^36] 17 CFR 200.30-3(a)(12), (59).
Sherry R. Haywood,
Assistant Secretary.