Cboe C2 adopts $5 bid-ask differential for market-maker quotes

On August 27, 2026, the Securities and Exchange Commission published a notice that Cboe C2 Exchange, Inc. filed a proposed rule change on August 17, 2026 (Release No. 34-106207; File No. SR-C2-2026-022; FR Doc No. 2026-17804). The filing seeks to amend Exchange Rule 5.52 to adopt two-sided quote bid/ask differentials, establishing a maximum permissible width of $5 between a market-maker's bid and offer in any appointed class.

The amendment would require market-makers to measure the bid/ask differential at the Trading Permit Holder (TPH) firm level, aggregating quotes across all Executing Firm IDs used in a particular option series. A bid of zero or no bid is treated as a $0 bid for the purpose of the differential calculation. The proposal also provides two exceptions: the Exchange may set wider differentials for specific series or classes, and the differential does not apply to in-the-money series where the underlying security's NBBO spread exceeds $5.

The Exchange cites Section 6(b)(5) of the Securities Exchange Act as the statutory basis, asserting that the rule promotes just and equitable principles of trade, enhances price discovery, and prevents excessively wide quotes that fail to provide meaningful liquidity. The notice, appearing in Federal Register Volume 91, Number 168, pages 56257-56260, invites comment from interested persons.

If adopted, the rule would bind all market-makers on the Cboe C2 Exchange, obligating them to maintain tighter two-sided markets in accordance with the new $5 differential standard.