CBOE CHAIRMAN CALLS FOR HARMONIZATION OF SEC, CFTC REGULATION

Posted September 2, 2009

CHICAGO – The chairman of the Chicago Board Options Exchange (CBOE) today urged harmonization of regulation by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in a joint meeting between the commissions on the subject.

Recognizing the “enormous complexity of the task ahead,”  William J. Brodsky, Chairman and CEO of the CBOE, pledged to work with both agencies and staff in the most constructive way possible.

In his testimony, Brodsky emphasized that the CBOE:

• Supports the Obama Administration's proposal that the SEC consider a shift from its current rules-based approach to one that is closer to the principles-based approach employed by the CFTC and by European regulators.

• Believes that the SEC should adopt a process for handling rule changes, including the approval of new products, which resembles the CFTC’s certification process allowing self-regulatory organizations to implement business decisions promptly. In addition, CBOE recommends that there be a neutral third-party arbiter to act as a tie-breaker in jurisdictional disputes over new products.

• Believes that margins for equivalent equity futures and securities products should be subject to the same standards and oversight process.

• Supports an amendment to current CFTC laws that would permit customers to cross-margin related futures instruments in a securities portfolio margin account.

• Believes that futures laws relating to insider trading and to broker suitability requirements on securities-based futures should be strengthened along the lines of provisions that currently apply to securities options.