Compliance & Examinations

The Compliance and Examinations Department conducts routine and for-cause examinations of CHX participant firms. Pursuant to agreements with other Exchanges and Associations, the Exchange is primarily responsible for examining participants for which it is the designated examining authority or DEA. Many of these firms are principally engaged in trading activities on or through the trading facilities of the Exchange, such as CHX institutional brokerage or market making firms. The examination program typically focuses on the following areas:

• The financial reporting and soundness of participant firms
• The operational structure and processes of such firms
• The overall system of supervision of the participant’s principal lines of business, especially the policies and procedures relating to trading-related issues

The Compliance and Examinations staff is also responsible for receiving and reviewing financial disclosure documents from participant firms. Approval from the staff is also required for the trading permit applications of new participant reorganizations and removal of regulatory capital of designated participants. The staff also may conduct a variety of ad hoc reviews relating to any relevant Exchange or SEC rule. Potential violations uncovered during any of these examinations or reviews may be referred to the Enforcement Department for disciplinary consideration.