Today's settlement allows CBOE, without admitting or denying any violation of federal law, to bring this matter to a close and thus avoid the significant cost and disruption to the Exchange of ongoing government investigations. CBOE Chairman and CEO William Brodsky said of the settlements: "It is in the best interest of the CBOE to put these matters behind us and allow us to direct our strategic, business, and legal resources toward moving forward in a rapidly changing, highly competitive environment."
"We are satisfied that the relief sought by the SEC consists largely of regulatory provisions that the CBOE believes should be put in place, particularly if done across the board by all the options exchanges. CBOE welcomes having these initiatives become part of an industry-wide SEC order which will help ensure that all exchanges will now be on a more equal regulatory footing." CBOE already has implemented or begun implementation of a number of the initiatives included in the new SEC order.
As part of the SEC settlement, CBOE also has agreed that it will continue to maintain its regulatory budget of $17 million in each of the calendar years 2000 and 2001, which will support enhancement of surveillance, investigation, and enforcement. "This regulatory budget," explained Brodsky, "is reflective of both CBOE's relative share of the options market and its existing commitment to maintain its position as the best-regulated options market."
Said Brodsky of the DOJ consent decree: "Our view is that it does not prevent the CBOE from moving forward with plans to maintain its position as the premier options trading forum." The consent order is aimed at prohibiting understandings among the exchanges concerning their decisions to list and delist option classes. The CBOE does not believe that it had reached any understandings with the other exchanges not to list option classes. Even before the current investigations had begun, the CBOE already had decided that, in the changing market environment, expanding its options listings was warranted. The CBOE informed both federal agencies in advance of its initiative in August 1999 to go forward with the planned expansion. Said Brodsky, " the bottom line here is that, under these circumstances, we certainly can live with the DOJ consent decree."
Finally, CBOE also announces that it has reached an agreement in principle with plaintiffs to resolve a private class action lawsuit concerning similar listing issues.
CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission. For additional information about the CBOE and its products, access the CBOE site on the World Wide Web at http://www.cboe.com.
