Cboe Adds Wide Market Shield to Prevent Trading Mishaps
Published Date: 11/28/2025
Notice
Summary
Cboe Exchange is updating its rules to protect traders from bad deals when the market prices get too spread out. This new wide market protection will pause certain orders to stop them from executing at unfair prices. Traders using Cboe Options should see safer trades starting right after the rule goes live, with no extra costs involved.
Analyzed Economic Effects
5 provisions identified: 4 benefits, 1 costs, 0 mixed.
New Wide Market Protection Pauses Risky Orders
Cboe amended Rule 5.34 to add a wide market protection (new Rule 5.34(a)(5)) that pauses certain inbound market, limit, Stop (Stop-Loss), and Stop-Limit orders when the national best bid and offer (NBBO) is “wide.” Paused orders are displayed at a Benchmark Price and enter an iterative drill-through process (each iteration length is exchange-determined and may not exceed three seconds) to avoid executions at potentially extreme or adverse prices.
Some Order Types Are Not Covered
The wide market protection explicitly excludes bulk messages, Intermarket Sweep Orders (ISOs), Immediate-or-Cancel (IOC) orders, and M- and N-capacity orders with a Time-in-Force of Day from receiving the wide market protection pause. The Exchange may still subject some of these orders to other protections (e.g., drill-through) as applicable.
Applies Except Right Before Session Close
The wide market protection applies during all trading sessions except for a pre-determined amount of time prior to the close of Regular Trading Hours (RTH) and the Curb session (the Exchange will set that time). This carve-out gives market participants a final opportunity to use Stop and Stop-Limit orders to exit positions before the session ends.
Some No-Bid/No-Offer Market Orders May Now Be Paused, Not Canceled
The Exchange will amend Rule 5.34 to allow certain sell market orders in no-bid series (NBB = 0 with NBO > $0.50) and buy market orders in no-offer series (NBO = 0) to enter the Book and be displayed at the Benchmark Price as the first drill-through iteration if they are subject to wide market protection, instead of being automatically canceled, rejected, or routed for manual handling.
Rule Became Operative Immediately Upon Filing
The Exchange filed the rule change on November 19, 2025, and the Commission waived the 30-day operative delay so the proposed rule change became operative upon filing. The Commission may still summarily suspend the rule within 60 days of the filing.
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