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Creation of a market network: the regulatory approval of Chicago Board Options Exchange (CBOE)

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  • Millo, Yuval

Abstract

The paper analyses the historical events that surrounded the evolution of the world's first exchange for financial options - Chicago Board Options Exchange (CBOE) - one of today's most successful derivative exchanges. The detailed narrative is focused on the relations between the American securities regulator, the Securities and Exchange Commission (SEC), and the developing options exchanges. The analysis shows how the regulatory values of the SEC, framed by the political and social circumstances of the time (1968-1973), underwent a dramatic transformation. This transformation was accompanied by the formation of a dense network of connections between the regulator and other market participants, as a result of which the proposal to set up an options exchange turned from a threat to the realisation of the SEC's goals to an important regulatory asset.

Suggested Citation

  • Millo, Yuval, 2004. "Creation of a market network: the regulatory approval of Chicago Board Options Exchange (CBOE)," LSE Research Online Documents on Economics 36060, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:36060
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    File URL: http://eprints.lse.ac.uk/36060/
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    References listed on IDEAS

    as
    1. Miller, Merton H., 1986. "Financial Innovation: The Last Twenty Years and the Next," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 21(4), pages 459-471, December.
    2. Pashigian, B Peter, 1986. "The Political Economy of Futures Market Regulation," The Journal of Business, University of Chicago Press, vol. 59(2), pages 55-84, April.
    3. Black, Julia, 2002. "Critical reflections on regulation," LSE Research Online Documents on Economics 35985, London School of Economics and Political Science, LSE Library.
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    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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