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Cboe BZX adopts tiered bid-ask limits for options market makers

Cboe BZX adopts tiered bid-ask limits for options market makers

Rule Changes

New rule caps spreads at $5 for options expiring within 270 days, $15 for longer-dated contracts

October 8th, 2026: SEC schedules new notice about Cboe BZX proposed rule changes

Overview

Updated Oct 30

Cboe BZX's tiered quote limits for options market makers took effect September 24, 2026, the day the exchange filed them. Quotes on series expiring within 270 days can be no wider than $5. Longer-dated series can run to $15.

The rule replaced a flat $5 cap that covered every expiration. Cboe Options, Cboe EDGX and Cboe C2 have filed matching rules. The SEC can still suspend the BZX change until November 23, 60 days after the filing, and no suspension had been announced as of November 11.

Why it matters

Traders in options more than 270 days out can now see market-maker quotes as wide as $15 instead of $5.

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Key Indicators

4
Cboe exchanges using the tiered framework
BZX, Cboe Options, Cboe EDGX and Cboe C2 all use the $5/$15 structure.
Sep 24
BZX effective date
The limits took effect when BZX filed the change on September 24, 2026.

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Organizations Involved

CE
Cboe BZX Exchange
Options Exchange
Rule took effect September 24, 2026, when filed

A US options exchange owned by Cboe Global Markets, operating as BZX Options.
U.S. Securities and Exchange Commission
U.S. Securities and Exchange Commission
Federal regulator
Regulator; published notice of the rule change

The US securities regulator that oversees options exchanges and their rule filings.
Cboe Global Markets
Cboe Global Markets
Public Company
Parent company of BZX, EDGX, and Cboe Options

The holding company that owns Cboe BZX, Cboe EDGX, and Cboe Exchange.
Cboe Exchange (Cboe Options)
Cboe Exchange (Cboe Options)
Options Exchange
Source of the tiered framework

Cboe's flagship options exchange, whose Rule 5.52(c) established the $5/$15 tiered framework BZX is adopting.
CE
Cboe C2 Exchange
Options Exchange
Filed rule change to adopt tiered framework

A US options exchange owned by Cboe Global Markets.

Timeline

September 2026 October 2026

7 events Latest: October 8th, 2026 · 1 month ago
Tap a bar to jump to that date

  1. SEC schedules new notice about Cboe BZX proposed rule changes

    Latest Regulatory

    The SEC schedules a new notice about Cboe BZX proposed rule changes for publication in the Federal Register.

  2. SEC publishes notice of BZX rule change

    Regulatory

    The SEC publishes notice of the BZX rule change, which took effect September 24, 2026, when BZX filed it.

  3. SEC publishes notice of Cboe C2 rule filing

    Rule Change

    The SEC publishes notice of a C2 filing to amend Rule 5.52(c) to conform to Cboe Options, adopting the $5/$15 bid-ask framework.

  4. Cboe BZX files rule change with SEC

    Rule Change

    BZX files to amend Rule 22.6, adding a time-to-expiration tier to market maker bid-ask differentials.

  5. Tiered bid-ask limits take effect at BZX

    Regulatory

    The $5 and $15 maximum quote differentials took effect when BZX filed the rule on September 24, 2026, under the SEC's fast-track process. The SEC can suspend the rule until November 23, 60 days after the filing.

  6. SEC publishes notice of Cboe EDGX rule filing

    Rule Change

    The SEC publishes notice of an EDGX filing to adopt $5/$15 bid-ask differentials under its Rule 22.6.

  7. SEC publishes notice of Cboe Exchange rule filing

    Rule Change

    The SEC publishes notice of a Cboe Exchange filing to adopt the same tiered structure under Rule 5.52.

Scenarios

1

SEC lets BZX rule stand after comment period

Likely Resolves by Dec 5, 2026

Discussed by: The rule took effect immediately under SEC Rule 19b-4(f)(6), which covers changes that do not significantly affect investor protection or competition.

The SEC published the notice and opened a comment period. Unless the SEC finds the rule inconsistent with the Securities Exchange Act, it stays in effect. The rule mirrors frameworks at Cboe Options and Cboe EDGX that the SEC has not suspended.

2

SEC suspends BZX rule after comments

Unlikely Resolves by Dec 5, 2026

Discussed by: The SEC retains authority under Section 19(b)(3)(C) of the Securities Exchange Act to suspend a rule change that appears inconsistent with the Act.

If commenters argue the wider $15 differential harms investors in long-dated options, the SEC could suspend the rule and start proceedings to disapprove it. That would be an unusual step for a rule matching frameworks already in place at other exchanges.

3

Rival exchanges adopt matching tiered frameworks

Possible Resolves by Q2 2027

Discussed by: The BZX filing notes that time-to-expiration tiering is an established concept across options exchanges, citing Cboe Options, ISE, and Phlx.

If the BZX rule stands, options exchanges without tiered frameworks may file similar changes to keep their market maker requirements competitive. The BZX filing cites ISE Options and Phlx as already using time-to-expiration tiers.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

2007-2008

Options penny pilot (2007-2008)

In 2007, the SEC approved a pilot program reducing the minimum price increment for options in 13 classes from $0.05 to $0.01. The pilot later expanded to more classes, narrowing bid-ask spreads and changing how market makers quoted prices.

Then

Spreads narrowed and trading volumes rose in the affected classes.

Now

Penny quoting became standard across US options markets, reshaping market maker economics.

Why this matters now

Shows how SEC-driven changes to options quote standards ripple through market making, much like BZX's new tiered differentials.

April 2001

Decimalization of US equities (2001)

On April 9, 2001, all US stock exchanges completed the switch from fractional pricing to decimals. The change narrowed minimum spreads from $0.0625 to $0.01.

Then

Bid-ask spreads narrowed sharply, cutting trading costs for investors.

Now

Market makers adapted to thinner margins, and the SEC later studied the effects on liquidity.

Why this matters now

A precedent for how quote standard changes alter market maker behavior and investor costs.

Sources

(8)
+3
Federal Register Daily Federal Federal Register Plutux Insights Cboe Global Markets Federal Register Federal Register Federal Register