Prof. Jayanth R. Varma's Financial Markets Blog

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Prof. Jayanth R. Varma's Financial Markets Blog, A Blog on Financial Markets and Their Regulation. This blog is currently suspended.

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Sat, 15 Jun 2013

CBOE 2013 versus BSE 1993

Earlier this week, the US SEC imposed a fine on the Chicago Board Options Exchange (CBO) for conduct reminiscent of what used to happen in the Bombay Stock Exchange (BSE) two decades ago. In the early 1990s, the BSE board was dominated by broker members, and allegations of favouritism, conflict of interest and neglect of regulatory duties were very common. At that time, many of us believed that these were the kinds of problems that the US SEC had solved way back in the late 1930s under Chairman Douglas. India might have been six decades behind the US, but it is widely accepted that security market reforms in the 1990s solved this problem in India, though this solution might have created a different set of problems.

The SEC order reveals problems at the CBOE which are very similar to those that the BSE used to have in the early 1990s:

In financially regulation, no problems are permanently solved – potential problems just remain dormant ready to resurface under more favourable conditions.

Posted at 14:29 on Sat, 15 Jun 2013     View/Post Comments (0)     permanent link