SEC Approves Cboe ISO Change; Quote Width, Step Up, Port Credit Filings Take Effect

The SEC approved one Cboe rule change and published three others that took effect on filing; together the changes permit Intermarket Sweep Orders to be entered as non-displayed orders, establish a $5 maximum bid/ask differential for options market makers, adopt a Step Up Mechanism for automated order handling, and provide fee credits for redundant logical ports.

The SEC approved amendments to Cboe EDGX rules to allow Intermarket Sweep Orders to be entered as non-displayed orders. The changes also permit non-displayed orders to re-price multiple times based on user instruction, allowing them to be ranked at more aggressive prices without crossing a protected quotation of an external market.

A Cboe BZX rule change establishing a maximum $5 bid/ask differential for market maker electronic quotes took effect on filing. The rule measures compliance at the firm level across all Executing Firm IDs used by a market maker in a particular series, and clarifies that a bid of zero satisfies the two-sided quotation requirement. The rule includes exceptions for in-the-money series where the national best bid and offer for the underlying security is wider than the differential.

A Cboe C2 rule change adopting a Step Up Mechanism for automated order handling took effect on filing. The SEC waived the standard 30-day operative delay, making it available immediately. The mechanism exposes eligible orders at the national best bid or offer for up to one second, allowing users to respond with improved pricing before the order is routed to an away exchange.

A Cboe EDGX rule change implementing an Order Entry Protocol Migration Program took effect on filing. The program provides fee credits to members who establish redundant logical ports solely as backup connections during an exchange-initiated migration to a new order entry protocol. The redundant port must be canceled within 30 days of designation to qualify for the credit.