FINRA Assumes Regulatory, Insider Trading Role for Options

The Financial Industry Regulatory Authority has signed an agreement that will make it the primary regulator for the options industry. The self-regulator announced Monday that it has signed an agreement with the Chicago Board Options Exchange (CBOE) and C2 Options Exchange (C2) to provide “market surveillance, financial surveillance, examinations, investigations, disciplinary services” and other regulatory services to the two exchanges starting Jan. 1, 2015.

FINRA also said it will thus be assuming responsibility for the Options Regulatory Surveillance Authority (ORSA) insider trading program, which the self-regulator said it would integrate with its own equity insider trading program, thus allowing FINRA to “conduct surveillance for all equities and options trading” in the U.S. 

As part of the agreement with CBOE and C2, FINRA said about 125 employees, “the vast majority,” of the exchanges’ Regulatory Services Division, ORSA, and Systems Development Department staffs who support options regulation “have accepted positions with FINRA.”