SEC Issues Waiver to Allow CBOE Electronic Options Trading

The SEC issued a waiver to make a CBOE Exchange, Inc. ("CBOE") proposal that facilitates electronic options trading on the exchange effective immediately. The SEC action was a response to the CBOE's decision to temporarily close its options trading floor.

According to the SEC, the CBOE proposal "modifies three trading rules with respect to CBOE's exclusively listed index options to more fully replicate in an electronic trading environment the trading that occurs on the CBOE's physical trading floor." The modifications include:

• allowing certain market makers involved in an options class to be solicited for orders submitted into CBOE's price improvement auction in order to (i) offer an alternative sourcing of liquidity that is similar to the one that occurs on the floor presently, and (ii) minimize disruption to existing liquidity sources on the floor;

• excluding market makers that participate in the all-electronic trading environment from being subject to certain continuous quoting obligation requirements; and

• enabling CBOE to facilitate more complex strategies with multiple option components so that they can function in an all-electronic trading environment.

The modifications are temporary until May 15, 2020.