CBOE Holdings Transfers Regulatory Duties to FINRA

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CBOE Holdings, the largest operator of stock options market in the United States decided to relinquish its responsibilities as an independent regulator for the securities industry and transferred it to FINRA.

Yesterday, CBOE Holdings announced that Chicago Board Options Exchange and C2 Options Exchange engaged the services of the Financial Industry Regulatory Authority (FINRA) to perform a majority of the regulatory services of the exchanges.

In addition, CBOE Holdings also entered an agreement with FINRA.  Under the deal, the stock options market operator will transfer its duties to FINRA to perform regulatory services for the Options Regulatory Surveillance Authority (ORSA), the main organization responsible in facilitating collaborations regarding insider trading surveillance and investigations for all all U.S. options exchanges.

Committed to maintaining highest standards in market regulation

In a statement, Edward Tilly, CEO of CBOE Holdings said, “By combining FINRA’s regulatory independence and efficiency and CBOE’s regulatory oversight experience, we are further reinforcing the integrity of our markets and investor protection.”

Tilly added that the agreements between CBOE Holdings and FINRA demonstrate their ongoing commitment to maintain the highest standards in market regulations and to provide a reliable service to the investment community.

FINRA will assume different regulatory duties including market and financial surveillance, investigations, examinations and disciplinary services for CBOE Holdings staring on January 1. According to the stock market options operator, approximately 125 of its employees who support options regulations accepted positions with FINRA.

FINRA Chairman and CEO Richard Ketchum said, “We are pleased to work with CBOE and C2 to protect the investing public. With this agreement, FINRA will be in a position to conduct cross-market surveillance on approximately 60 percent of the options market.”

Ketchum added, “FINRA looks forward to working with CBOE to detect and deter manipulative and abusive trading, and ensure the integrity of our markets.”

CBOE Holdings and C2 will maintain in-house regulatory team

CBOE Holdings and C2 Options Exchange will remain responsible for the regulation of their markets. Both firms will maintain in-house regulatory team to manage regulatory surveillance programs, and to supervise the FINRA regulatory services relationship.

Tim Thompson, senior vice president and chief regulatory officer at CBOE Holdings will join FINRA as senior vice president. Greg Hoogasian will assume his position.


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