Cboe Defends Proposed Disruptive Trading Rule Amid Industry Pushback
Cboe filed proposed Rule 8.23 targeting disruptive trading, responding to industry concerns.
Why it matters: Legal professionals must understand Rule 8.23's compliance implications and address regulatory authority limits raised by stakeholders, as it affects enforcement risk on a major exchange.
- Cboe filed proposed Rule 8.23 with the SEC on January 20, 2026, targeting disruptive trading activities.
- The SEC published notice and request for comments on January 28, 2026, with a comment period open to stakeholders.
- Rule 8.23 parallels disruptive trading rules from futures exchanges like CME Rule 575 and IFUS Rule 4.02(l).
- Industry commenters criticized including recklessness as an intent standard, questioning SRO authority under the Securities Exchange Act of 1934.
On January 20, 2026, Cboe Exchange, Inc. filed proposed Rule 8.23 with the Securities and Exchange Commission (SEC), aiming to codify prohibitions against disruptive order and quote entry and trading practices perceived to harm fair and orderly markets.
The SEC then published a notice of the proposal on January 28, 2026, inviting public comments through a formal period. Stakeholder feedback is publicly available through the SEC’s comment file.
Rule 8.23 closely parallels existing disruptive trading rules enforced in futures markets, including CME Rule 575 and IFUS Rule 4.02(l). These rules prohibit manipulative or disruptive trading behaviors to protect market integrity.
However, industry commentators expressed concern in SEC filings and public forums over Cboe’s inclusion of recklessness as part of the scienter, or mental state, standard necessary to establish violations under Rule 8.23. Critics argue this broadens enforcement authority beyond traditional SRO powers granted by the Securities Exchange Act of 1934, potentially raising litigation and compliance risks for market participants.
In direct responses filed with the SEC, Cboe acknowledged the concerns and stated it would “consider revising the provision” related to disciplining participants for disruptive conduct to more closely align with existing standards governing enforcement initiation. No timeline or details on revisions have been released.
Compliance officers and legal teams advising clients trading on Cboe platforms should track the SEC comment outcomes and any SEC decision carefully, as Rule 8.23 could materially affect monitoring and enforcement frameworks governing trading conduct.
By the numbers:
- January 20, 2026 — Date Cboe filed proposed Rule 8.23 with the SEC
- January 28, 2026 — Date SEC published notice inviting public comments
- 15 U.S. Code Chapter 2B — Governs SRO authority under Securities Exchange Act of 1934
What's next: The SEC's public comment period is ongoing, with a decision expected later in 2026; Cboe may revise Rule 8.23 based on feedback.