# Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 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 is Determined To Be Wide
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 December 15, 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**
Cboe Exchange, Inc. (the “Exchange” or “Cboe Options”) 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). Specifically, the Exchange proposes changes 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) [^3] or Stop-Limit [^4] orders which would either execute or post to the Book [^5] at potentially extreme prices.
[^3] 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).
[^4] 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).
[^5] “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”).
Currently, pursuant to Rule 5.34(a)(5)(D), bulk messages, Intermarket Sweep Orders (“ISOs”), Immediate-or-Cancel orders (“IOCs”), and M and N capacity [^6] orders with a Time-in-Force of Day [^7] are excluded from the wide market protection mechanism. The Exchange proposes to amend Rule 5.34(a)(4)(D) to exclude all M and N capacity orders from the wide market protection mechanism (regardless of Time-in-Force).
[^6]*See* Rule 1.1 (definition of “Capacity”).
[^7] A “Time-in-Force” means the period of time the System holds an order or quote. Time-in-Force may include Day, Fill-or-Kill, Good-til-Cancelled, Good-til-Date, Immediate-or-Cancel, Limit-on-Close, Market-on-Close, and At the Open. *See* Rule 5.6(d). The Exchange notes that all Immediate-or-Cancel (“IOC”) orders are excluded from wide market protection. *See* Rule 5.34(a)(4)(D).
As noted, the current rules already exclude M and N capacity orders with a Time-in-Force of Day, which encompasses the majority of Market-Maker orders. In general, Market-Makers are positioned to observe and subsequently address wide market scenarios, by tightening the NBBO with an order or quote. The proposed change merely extends the current rules to include any other potential type of Market-Maker order, thereby ensuring consistency across all potential types of Market-Maker orders.
**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.
[^8] 15 U.S.C. 78f(b).
[^9] 15 U.S.C. 78f(b)(5).
[^10]*Id.*
In particular, the Exchange believes the proposed rule change to exclude all M and N capacity orders from the wide market protection mechanism (regardless of Time-in-Force) 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 its initial proposal, the Exchange proposed to exclude only M and N capacity orders with Time-in-Force of Day, as the majority of Market-Maker orders are submitted with a Time-in-Force of Day. The proposed change to exclude all M and N capacity orders, regardless of Time-in-Force, is designed to ensure consistency across all potential types of Market-Maker orders. The Exchange believes the proposed change 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 believes the proposed change will support the operational efficiency of the wide market protection mechanism and alleviate potential confusion, by removing an unnecessary operational distinction between types of Market-Maker orders, to the benefit of investors.
Finally, the Exchange believes the proposed change to exclude all M and N capacity orders is not unfairly discriminatory, as the proposed change will apply to all M and N capacity orders. The current rules already exclude M and N capacity orders with a Time-in-Force of Day, which encompasses the majority of Market-Maker orders. The proposed change merely extends the current rules to include any other potential type of Market-Maker order. As noted above, Market-Makers are best positioned to observe and address wide market scenarios.
**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 to all M and N capacity orders uniformly, regardless of Time-in-Force. As noted above, the Exchange believes the proposed change is not unfairly discriminatory, as Market-Makers are best positioned to observe and address wide market scenarios.
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 become effective pursuant to Section 19(b)(3)(A) of the Act [^13] and Rule 19b-4(f)(6) [^14] thereunder.
[^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.
A proposed rule change filed under Rule 19b-4(f)(6) [^15] normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii), [^16] 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 support the operational efficiency of the wide market protection mechanism and alleviate potential confusion, by removing an unnecessary operational distinction between types of Market-Maker orders, to the benefit of investors. 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. [^17]
[^15] 17 CFR 240.19b-4(f)(6).
[^16] 17 CFR 240.19b-4(f)(6)(iii).
[^17] 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-2025-091 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-2025-091. 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-2025-091 and should be submitted on or before January 12, 2026.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. [^18]
[^18] 17 CFR 200.30-3(a)(12), (59).
Sherry R. Haywood,
Assistant Secretary.