The Chicago Board Options Exchange (CBOE) and C2 Options Exchange are in discussions with the Financial Industry Regulatory Authority (FINRA) on a potential agreement for FINRA to provide certain regulatory services to their options markets.
Negotiations are ongoing, and there is no assurance of a final regulatory services agreement. If terms are reached, a regulatory services agreement could potentially be finalised within the next few months, after consultation with CBOE's regulator.
The potential regulatory services agreement is not expected to have a significant impact on CBOE's financial results.
"CBOE is committed to maintaining the highest standards in market regulation," says CBOE Holdings chief executive Edward T. Tilly (pictured). "Teaming with FINRA, the largest regulator in the securities industry, could enable us to continue to meet those standards and to optimally serve the investing public going forward. We believe that FINRA's independence and regulatory efficiency together with CBOE's regulatory oversight experience and options expertise could further strengthen the integrity of our markets and investor protection."
If CBOE and FINRA reach an agreement, it may include the transition to FINRA of certain staff in CBOE's regulatory services division involved in the CBOE and C2 regulatory oversight process, as well as some staff in CBOE's systems development group, who support options surveillance. In that event, CBOE and C2 would still be responsible for the regulation of their markets and would maintain an in-house regulatory team to, at a minimum, manage CBOE and C2 regulatory oversight programmes and oversee the FINRA regulatory services relationship.
Regulation of the CBOE Futures Exchange (CFE) is not anticipated to be part of this agreement with FINRA.
