Cboe Client Suspension Rule
The Cboe Client Suspension Rule serves to assist in taking swift action to prohibit manipulative behavior, such as spoofing and layering, on the Cboe BZX Options and Cboe EDGX Options Exchanges.
The Rule was approved by the Securities and Exchange Commission (SEC) in February 2016, and was a first of its kind in the U.S. options markets.
Under normal disciplinary processes, disruptive quoting and trading practices, while identified quickly, can sometimes take months or even several years to reach a final resolution.
With the Cboe Client Suspension Rule, this resolution process is expedited to allow Cboe regulators to stop ongoing manipulative behavior in a much shorter period of time.
The Rule targets problematic and recurring activities that Cboe believes are most frequently undertaken by small groups of day traders, often located in foreign jurisdictions, and that potentially hinder an exchange's ability to respond in a timely manner.
Cboe developed the Client Suspension Rule with the belief that regulators should have the proper tools to stop such disruptive quoting and trading behavior as quickly as possible for the benefit of all investors.
The Rule works to preserve Cboe BZX Options and Cboe EDGX Options Exchange Members' due process rights through expedited notice and an opportunity to be heard by an impartial Hearing Officer.
The Cboe Client Suspension Rule is part of an ongoing effort to prohibit manipulative behavior on our markets. Most recently, Cboe introduced its U.S. Regulatory Complaints, Tips and Referrals Form to work in coordination with Members, TPHs and market participants of the Exchanges on identifying these types of behavior in the U.S. markets.