Cboe’s proposed rule change for Designated Primary Market-Makers in extended-hours index options is now a live SEC market-structure review, not a directional call on SPX, VIX, XSP, or RUT.
The filing matters because Cboe’s Global Trading Hours and Curb sessions already give traders access to major index-option products outside the regular U.S. cash day. Those sessions can be useful around overnight macro news, late-day portfolio adjustments, and global risk events. They can also be thin, wide, and harder to read than regular-hours markets. Cboe’s DPM proposal is about who may be appointed to quote those markets, what obligations and incentives may apply, and how the SEC weighs that structure against investor-protection standards.
This article is not financial advice, investment advice, or trading advice. Options trading involves risk and is not suitable for all investors.
What Happened
Cboe filed Amendment No. 2 to SR-CBOE-2026-016 on May 15, 2026. The amendment says it makes no substantive change to the proposal, but it clarifies two items that matter for the extended-hours rule debate.
First, Cboe clarified that priority overlays for appointed DPMs in Global Trading Hours and Curb sessions could include the small-size order entitlement, not only the DPM participation entitlement. Second, Cboe clarified a comparison between ordinary market-maker obligations and DPM quoting obligations. The amendment says ordinary market-makers are required to quote 60% of the series during 90% of the trading day across sessions, while DPMs would face a higher quoting regime under the DPM rules.
The sequence is important. The SEC had already issued Release No. 34-105479 on May 13, 2026, instituting proceedings to determine whether to approve or disapprove the proposal as modified by Amendment No. 1. The SEC also said that opening proceedings does not mean it has reached a conclusion on the merits. Cboe then filed Amendment No. 2 two days later and asked for accelerated approval of that amendment.
In plain English, the rule is not approved, not blocked, and not live. It is under SEC review.
What Cboe Wants To Change
The proposal would let Cboe appoint DPMs by trading session. A listed options class could have the same DPM across regular trading hours, Global Trading Hours, and the Curb session. It could have different DPMs in different sessions. It could also have no DPM in a session.
That flexibility is the center of the market-structure story. Cboe says it has historically appointed Lead Market-Makers in Global Trading Hours and Curb, but not DPMs. A DPM framework would bring a different package of obligations and potential entitlements to extended-hours trading.
The proposal would extend DPM obligations to GTH and Curb where a DPM is appointed. It would also allow DPM participation entitlements, and potentially other Rule 5.32(a)(2) priority overlays, to apply during those sessions. Amendment No. 2 specifically calls out the small-size order entitlement as one of the overlays that may be applied.
For traders, the relevant point is not the internal title of the liquidity provider. The relevant point is whether the rule gives Cboe a stronger incentive and obligation framework for two-sided quoting outside regular hours.
Why This Matters For Options Traders
Extended-hours options trading is a quote-quality story before it is a volatility story.
Cboe’s own rulebook warns that trading outside regular hours may involve lower liquidity, higher volatility, wider spreads, changing prices, exaggerated reactions to news, and limited dissemination of underlying index values. That is exactly the environment where market-maker obligations and incentives can matter.
SPX, VIX, XSP, and RUT are especially relevant because they trade in Cboe’s Global Trading Hours from 8:15 p.m. to 9:25 a.m. ET and in the Curb session from 4:15 p.m. to 5:00 p.m. ET, according to Cboe’s current hours materials and rulebook references in the research report. Both sessions are all-electronic.
If Cboe eventually receives approval and uses the new framework, session-specific DPM appointments could make extended-hours markets more attractive for designated liquidity providers. That could help quote presence or execution quality in some windows. But that is a possible market-structure effect, not a promised trading outcome.
The caveat is material: Cboe would not be required to appoint a DPM in every class or every session. The proposal also allows quoting compliance to be measured across sessions and classes in the aggregate. A DPM might satisfy its overall obligation even if one session is weaker than another. Traders should not read “DPM” as a guarantee of tight spreads in every overnight book.
The Options Angle
For implied volatility and expected move, better quoting can make the inputs cleaner. It does not change the pricing model by itself.
An overnight SPX or XSP straddle can look like a market-implied move, but the number is only as reliable as the bid and ask behind it. Wider spreads make midpoint estimates less dependable. Thin depth can make marks jump. Limited underlying-index dissemination can also make it harder to compare option prices with a current cash reference during parts of GTH and Curb.
That is why this filing is relevant to readers who study implied volatility or use straddles to frame event risk. The rule proposal does not say implied volatility should rise or fall. It addresses liquidity-provider appointments, priority overlays, and quoting obligations. If it ever improves quote quality, the benefit would show up in execution and cleaner marks, not in a direct bullish or bearish signal.
The VIX angle needs similar care. Cboe’s VIX methodology uses SPX/SPXW option quotes on Cboe C1, and VIX is disseminated during regular trading hours and part of GTH. That makes overnight SPX quote quality relevant to VIX-related interpretation, but not a reason to treat the filing as a volatility forecast.
For assignment risk, this is not the same discussion a trader would have around American-style single-stock or ETF options. Cboe materials describe SPX, XSP, and RUT options as cash-settled and European-style. That makes cash settlement and European exercise more relevant than classic early assignment. The bigger extended-hours issues are spread discipline, slippage, stale marks, settlement mechanics, and position sizing.
What The SEC Is Reviewing
The SEC’s proceedings order frames the review around Section 6(b)(5) of the Securities Exchange Act, including whether the proposal is consistent with investor protection, fair and orderly markets, and the prevention of unfair discrimination.
The Commission asked for analysis on several points:
- Whether Cboe has provided enough support for session-specific DPM appointments, including the possibility that a class has no DPM in a session.
- Whether aggregate cross-session quoting compliance is appropriate.
- Whether applying Rule 5.32(a)(2) priority overlays to DPMs in any appointed session is consistent with the Exchange Act.
Those questions are procedural and structural. They are not about whether traders should buy or sell index options. They are about how Cboe may structure liquidity-provider obligations and rewards in sessions where market conditions can differ sharply from the regular trading day.
What Traders May Misunderstand
The first misunderstanding is that SEC proceedings mean rejection. They do not. The SEC explicitly says that instituting proceedings does not mean it has reached any conclusion.
The second misunderstanding is that Amendment No. 2 started the SEC review. It did not. The SEC order came on May 13, 2026. Cboe’s Amendment No. 2 followed on May 15, 2026.
The third misunderstanding is that approval would automatically tighten spreads in every extended-hours session. The filings do not promise that. They would give Cboe more flexibility to appoint DPMs and apply certain obligations and entitlements. Actual spread width, depth, and fill quality would have to be observed after any implementation.
The fourth misunderstanding is that overnight options prices carry the same information quality as midday regular-hours prices. Cboe’s own risk disclosures warn otherwise. Limited liquidity, wider spreads, and incomplete underlying-reference dissemination can make overnight marks noisier.
The final misunderstanding is directional. This is not evidence that options traders are betting on a rally, a selloff, or a volatility spike. It is an SEC/rule-filing market-structure story.
Practical Takeaways
For self-directed traders, the practical checklist is straightforward:
- Treat GTH and Curb quotes as session-specific markets, not as identical substitutes for regular-hours liquidity.
- Use limit orders and pay attention to displayed size, spread width, and likely slippage.
- Be careful when using overnight option midpoints to estimate implied volatility, expected move, or skew.
- Separate market-structure news from trade direction. This filing changes incentives and obligations only if approved and implemented.
- Watch for Cboe implementation notices if the SEC eventually approves the proposal, because the real-world impact depends on which products and sessions receive DPM appointments and priority overlays.
Strategy selection should follow the same logic. A trader studying a long straddle or long strangle around overnight macro risk should care about the quality of the chain used to price the trade. A trader using defined-risk spreads should still treat extended-hours fills as potentially different from regular-hours fills. A trader watching VIX should distinguish between the spot index, VIX options, and SPX option quotes used in the VIX methodology.
Sources
- Cboe Amendment No. 2 to SR-CBOE-2026-016:
https://cdn.cboe.com/resources/regulation/rule_filings/pending/2026/SR-CBOE-2026-016-Amendment-No-2.pdf - SEC Release No. 34-105479, notice of Amendment No. 1 and order instituting proceedings:
https://www.sec.gov/files/rules/sro/cboe/2026/34-105479.pdf - Federal Register notice of the original filing:
https://www.federalregister.gov/documents/2026/02/13/2026-02883/self-regulatory-organizations-cboe-exchange-inc-notice-of-filing-of-a-proposed-rule-change-to-amend - Federal Register notice designating a longer period for SEC action:
https://www.federalregister.gov/documents/2026/03/30/2026-06041/self-regulatory-organizations-cboe-exchange-inc-notice-of-designation-of-a-longer-period-for - Cboe C1 Exchange Rule Book:
https://cdn.cboe.com/resources/regulation/rule_book/C1_Exchange_Rule_Book.pdf - Cboe U.S. options trading hours:
https://www.cboe.com/en/about/hours/us-options/ - Cboe VIX methodology:
https://cdn.cboe.com/resources/indices/Volatility_Index_Methodology_Cboe_Volatility_Index.pdf - SEC public comment page for SR-CBOE-2026-016:
https://www.sec.gov/rules-regulations/public-comments/sr-cboe-2026-016
Bottom Line
Cboe’s DPM amendment is best read as an extended-hours liquidity proposal under SEC review. It could eventually change how Cboe assigns market-making responsibilities and priority benefits in SPX, VIX, XSP, and RUT sessions outside regular hours. It does not mean the rule is live, it does not guarantee better fills, and it does not forecast market direction.
For OptionsTrading.Zone readers, the useful lesson is broader: when trading index options outside regular hours, market structure is part of the risk. Liquidity, quote width, data visibility, and session rules can matter as much as the options strategy itself.
