DEPARTMENT OF REGULATED ENTITIES
The Department of Regulated Entities in the Registration and Regulatory Services Division has varied responsibilities, which are described individually below.
In June 2006, the SEC approved the National Market System plan entered into by the six (6) U.S. options exchanges (American Stock Exchange, Boston Stock Exchange, CBOE, International Securities Exchange, NYSE Arca and the Philadelphia Stock Exchange) providing for the creation of the Options Regulatory Surveillance Authority (ORSA). ORSA is responsible for conducting insider trading investigations related to options on behalf of all six exchanges. CBOE was chosen as the Regulatory Services Provider (RSP) for ORSA. Using a robust web-based application, ORSA staff is responsible for detecting trading in advance of the release of non-public corporate information as well as research reports, analyst recommendations, and market rumors by corporate officers, directors or employees of a publicly traded company or public investors. Possible insider trading effected by non-CBOE members is referred to the SEC, while activity effected by CBOE members is referred to the CBOE's Business Conduct Committee (BCC). ORSA staff is in continual communication with the SEC, other governmental agencies and other exchanges, both nationally and internationally, to coordinate investigations across marketplaces. The ORSA staff has also provided expertise and has served as an expert witness in cases prosecuted by the SEC or U.S. Attorney's office.
The CBOE Stock Exchange (CBSX) began trading on March 5, 2007. As a Regulation NMS compliant facility, the CBSX is a Self Regulatory Organization (SRO). CBOE was chosen to conduct the surveillance activities related to monitoring the CBSX marketplace and it's Trading Permit Holders (TPH) for compliance with CBSX and SEC rules and regulations. Using a robust web-based surveillance program, CBSX staff monitors the trading activity and conduct of TPHs and associated persons to detect violations such as front running, manipulation and to insure compliance with Regulation SHO. The staff also conducts exams, as applicable, of each members Sponsored User program and compliance with Regulation NMS Rules.
The CBOE Futures Exchange (CFE) was launched in March 2004 and is a wholly-owned subsidiary of CBOE. This fully electronic contract market is registered with the Commodity Futures Trading Commission (CFTC). Although the product line is primarily index futures contracts, CFE transactions clear at The Options Clearing Corporation (OCC). CFE has entered into a Regulatory Services Agreement (RSA) with the National Futures Association (NFA) pursuant to which the NFA conducts daily surveillance activities of the CFE marketplace and Trading Privilege Holders (TPH) of CFE. Should a violation of CFTC Core Principals or CFE rules be detected, an investigative summary is provided to the CFE staff that is, in turn, presented to the CFE BCC for further action as warranted.
If you would like further information about the Department of Regulated Entities, please call (312) 786-7752.