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advice for businesses in dealing with the expanding coronavirus events

SEC Facilitates Cboe Shift to Electronic Trading

March 16, 2020

By Michael L. Spafford & Daren F. Stanaway

The Cboe Exchange Inc. (“Cboe”) announced that effective Monday, March 16, 2020, and until May 15, 2020, it will temporarily close its options trading floor in Chicago amidst growing Coronavirus concerns.

  The SEC took swift action in response, issuing a March 14, 2020 noticing, for immediate effectiveness, a Cboe proposed rule filing to enable the exchange to continue operations entirely via electronic trading.  The Cboe rule filing modifies three rules related to the exchange’s exclusively listed options, to more fully replicate physical trading in an electronic environment, as follows:

  1. Market makers with an appointment in an options class may be solicited for orders submitted into Cboe’s price improvement auction, to more closely replicate sourcing of liquidity that occurs on the floor and ensure minimal disruption to existing liquidity sources.

  2. Market makers that would not be subject to certain continuous quoting obligations in a floor trading environment also are excluded from those requirements in an all-electronic trading environment.

  3. The Cboe will better enable certain complex strategies with multiple option components to function in an all-electronic environment.

The Cboe also provided to the SEC additional information on associated regulatory and surveillance procedures, will keep the SEC up-to-date regarding the functioning of those procedures, and will continue to work with the SEC as these changes are implemented.  The SEC’s release marks the agency’s latest move in taking action in connection with business continuity plans for exchanges, clearing agents, and other market participants with operational and other matters related to the Coronavirus, as market participants continue to seek avenues to keep key markets open and functioning notwithstanding virus concerns.


The modifications may be lifted prior to May 15, 2020 if the trading floor becomes operable before then.  Alternatively, they may be extended if circumstances so require.

For further details regarding potential regulatory and corporate governance implications of the Coronavirus, please see our earlier .