The Chicago Board Options Exchange (CBOE) is in talks with the Financial Industry Regulatory Authority (FINRA) about possibility outsourcing the regulation of its options markets to FINRA.
CBOE Holdings, Inc. says hat the CBOE and C2 Options Exchange are in discussions with FINRA on a potential agreement for the self-regulatory organization to provide certain regulatory services to the options markets. This potential arrangement is not expected to include transferring regulation of the CBOE Futures Exchange (CFE), the firm notes.
The CBOE says that negotiations are ongoing, and there is no guarantee that they will reach a deal. If they do agree to terms, and agreement could be finalized within the next few months, it says.
If they reach an agreement, it may involve staff in CBOE’s regulatory services division that deal with market oversight, and some staff in its systems development group that support options surveillance moving over to FINRA. “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 programs and oversee the FINRA regulatory services relationship,” it says.
“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,” said CBOE Holdings CEO, Edward Tilly.