Cboe Tightens Bid-Ask Spreads: Quotes Get Balanced
Published Date: 2/12/2026
Notice
Summary
Cboe Exchange is updating its rules to set clear limits on how wide market-makers can set their bid and ask prices. This change affects market-makers by making quotes more balanced and transparent, helping traders get fairer prices. The new rule kicks in immediately, aiming to keep the market smooth and competitive without extra costs.
Analyzed Economic Effects
6 provisions identified: 3 benefits, 2 costs, 1 mixed.
Market-Maker Quote Width Capped at $5
Cboe now limits a Market-Maker's electronic bid/ask quote in an option series to a maximum width of $5. This $5 maximum applies regardless of the Market-Maker's bid and is part of the Exchange's Rule 5.52(c) change.
Exchange May Set Wider Differentials for Some Series
Cboe may establish bid/ask differentials other than the $5 general maximum for one or more option series or classes. The Exchange will have flexibility to set wider or narrower differentials tailored to particular market conditions or product characteristics.
NBBO Exception for In-The-Money Series
The bid/ask differential limits do not apply to in-the-money option series when the national best bid and offer (NBBO) for the underlying security is wider than Cboe's differential; in such cases, the option differential may be as wide as the NBBO in the underlying security.
Firm-Level Aggregation of Quotes for Compliance
Cboe will measure compliance with the bid/ask differential at the Trading Permit Holder (TPH) firm level by aggregating quotes across all Executing Firm IDs (EFIDs) used by that Market-Maker in a series. A Market-Maker's multiple EFIDs are combined into the firm's aggregate quote for determining whether the quote width meets the rule.
No-Bid Treated as $0 in Width Calculations
Cboe clarifies that a bid of zero or the absence of a bid is treated as a $0 bid when calculating the bid/ask differential. For example, a single EFID showing only a $10 offer with no bid counts as a $10 width unless other EFIDs aggregate a bid.
Rule Became Operative Immediately Upon Filing
The Exchange filed the rule change on January 29, 2026, and the SEC waived the 30-day operative delay so the rule became operative upon filing. The Exchange said the immediate effect would enhance market quality without delay.
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