The U.S. Financial Industry Regulatory Authority (FINRA) is stepping up its scrutiny of the U.S. options market, and will be enhancing its surveillance of both equities and options markets.
FINRA said Monday that it has signed a deal to provide market surveillance, financial surveillance, and discipline, among other regulatory services, to the at the Chicago Board Options Exchange (CBOE) and the C2 Options Exchange. The arrangement is to take effect starting Jan. 1, 2015.
The self-regulatory organization reports that it already provides cross-market surveillance for over 99% of the U.S. equities market; and, with the agreement announced today, it will also be better positioned to detect cross-product (equity and options) manipulation.
"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% of the options market. FINRA looks forward to working with CBOE to detect and deter manipulative and abusive trading, and ensure the integrity of our markets," said FINRA chairman and CEO, Richard Ketchum.
Additionally, FINRA announced that it will be taking over responsibility for the Options Regulatory Surveillance Authority's (ORSA) options insider trading program. It plans to integrate the options insider trading program with its existing equity insider trading program to conduct surveillance for insider trading for all U.S. equities and options trading.
Most of the regulatory staff of both the CBOE and ORSA have accepted positions with FINRA, it notes.