The U.S. Securities and Exchange Commission has charged the Chicago Stock Exchange with failing to enforce some of its trading rules.

The SEC has settled an administrative action against the CSE, which consented to entry of the order and to the imposition of sanctions and a cease-and-desist order without admitting or denying the commission’s allegations.

Specifically, the commission alleged the CSE’s surveillance program failed to detect violations by its members between 1998 and the end of 2001 of the firm-quote rule, trading-ahead prohibitions and the limit-order display rule. In addition. The commission charged that even when the exchange detected such violations, it often failed to take adequate disciplinary actions against the individuals and/or firms that committed the violations.

The commission’s order censures the CSE and requires it to cease and desist from future violations. The settlement also requires the exchange to: create a regulatory oversight committee comprised almost exclusively of individuals with no material business relationship with the exchange; engage an independent consultant; and, file various certifications confirming its ongoing compliance with its statutory obligations.