Department Of Equity Trading Regulation

The Department of Equity Trading Regulation ("DETR" or the "Department") is responsible for monitoring CBOE Stock Exchange ("CBSX") Trading Permit Holder ("TPH") and associated persons compliance with CBSX Rules and Federal Securities laws such as Regulation SHO and Regulation NMS. CBSX is Regulation NMS compliant and a facility of the Cboe. Cboe conducts the surveillance, investigative and examination activities related to monitoring the CBSX marketplace and its TPHs for compliance with CBSX and SEC rules and regulations. DETR uses a variety of sophisticated computer generated exception reports and web-based surveillance programs to detect and investigate potential violations. Standard investigative techniques include obtaining testimony and applying tested analytical techniques to interpret a variety of trading and market data. DETR conducts surveillance to detect manipulative activity such as front-running, marking and pre-arranged trading. Surveillance is also conducted to detect activity such as spoofing, quote stuffing, trade throughs, locked and crossed markets and to monitor TPH compliance with quoting and crossing obligations. DETR is also responsible for investigating referrals and complaints related to CBSX TPHs and their activity on other markets such as NASDAQ or NYSE. DETR also performs all equity investigations on behalf of Regulatory Services Agreement client exchanges.

In addition to its surveillance and investigative responsibilities, DETR also performs all CBSX trade practice examinations, Cboe/C2/CBSX Market Access examinations, Cboe/C2/CBSX Regulation NMS examinations and Sponsored User examinations. Examinations include a review of written supervisory procedures and books and records as well as on-sight inspection and testing of trading systems, compliance monitoring tools and risk controls.

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