Law Commons^™

Sec And Frb Treatment Of Options: An Experiment In Market Regulation (Comment), George Lee Flint Jr

Faculty Articles

The Chicago Board Options Exchange (“CBOE”) provided the Securities and Exchange Commission (“SEC”) with an opportunity to exercise regulatory rules to protect the public and economy. The options market was an appropriate testing ground, as options presented complex and untested risks in the broader securities market. Before the CBOE attempted to add security and balance, options existed in an unorganized and underfinanced market. The market needed to expand. However, the SEC was faced with a few problems of its own making. Rule 9b-1 undermined the SEC’s regulatory intent by providing loopholes that would leave it powerless to intervene in any …