On September 5, the Chicago Board Options Exchange, Incorporated filed with the Securities and Exchange Commission proposed rule changes to CBOE Rules 3.6A, 9.2, 9.3, 9.6, 9.7, 9.8 and 26.10, which would require member organizations to (i) integrate the responsibility for supervision of a member organization’s public customer options business into its overall supervisory and compliance program, and (ii) strengthen member organizations supervisory procedures and internal controls.
First, the proposed rule, which creates a supervisory structure for options similar to those required by the NYSE and NASD rules, would eliminate the requirement that member organizations qualified to do a public customer business in options must designate a single person to act as Senior Registered Options Principal (SROP) for the member organization and that each such member organization designate a specific individual as a Compliance Registered Options Principal (CROP). Under the proposed rules the functions of a SROP and CROP would be integrated into the member organizations’ overall supervisory and compliance programs. The proposed rule would allow the most qualified person within the organization to be in charge of a given supervisory responsibility.
In addition, the CBOE is proposing to amend certain rules (modeled after the NYSE and NASD rules approved by the SEC in 2004) to strengthen member supervisory procedures and internal controls in light of the preceding proposal to integrate options and non-options sales practice supervision and compliance functions.