SEC Suspends and Institutes Proceedings on Cboe Exchange Proposed Rule 8.23 to Prohibit Disruptive Order and Quote Activity
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The SEC has temporarily suspended Cboe Exchange's immediately effective rule change that adopts new Rule 8.23. This rule would explicitly codify what constitutes prohibited disruptive order and quote entry and trading activity on the exchange. The rule requires that all orders and quotes be entered for bona fide transactions or legitimate purposes and provides a non-exhaustive list of prohibited non-bona fide purposes. It also lists factors the Exchange may consider in determining violations and certain activities that do not constitute violations absent other circumstances. The Commission is concerned whether the proposal meets the requirements of Sections 6(b)(5) and 6(b)(8) of the Securities Exchange Act regarding prevention of manipulation, protection of investors, and not imposing unnecessary burdens on competition. Proceedings have been instituted to gather further public comment by April 15, 2026.
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Key Changes
- Adoption of new Rule 8.23 requiring orders and quotes only for bona fide transactions or legitimate purposes
- Non-exhaustive list of prohibited non-bona fide purposes for order/quote entry
- Publication of factors Exchange may consider when assessing disruptive or manipulative activity
+ 3 more changes with Pro
Obligations
What this law requires
Cboe Exchange must temporarily suspend implementation of Rule 8.23 prohibiting disruptive order and quote activity pending SEC review
Trading Permit Holders (TPHs) must submit all orders and quotes for the purpose of executing bona fide transactions or in good faith for legitimate purposes only
Cboe Exchange must not permit orders and quotes submitted for non-bona fide or non-legitimate purposes, including those enumerated in Rule 8.23(a)
Cboe Exchange must enforce compliance with Rule 8.23 by applying the factors listed in Rule 8.23(b) when assessing whether conduct constitutes disruptive or manipulative activity
Interested persons must submit additional public comments on the proposed Rule 8.23 by April 15, 2026 to inform SEC approval determination