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SEC Warns Brokerage Firms Re: Options Prices
Firms must ensure that customers receive the best execution prices on options orders, SEC Chairman Arthur Levitt said in a letter last week.
Levitt's warning comes amid a Justice Department investigation focusing on whether the industry, and certain traders, is systematically conspiring to give investors anticompetitive prices for options, by way of excessively wide bid-ask spreads.
Another concern is the informal agreement among the country's four options exchanges not to list certain options on more than one of those exchanges. About 60% of options are listed on a single exchange. Dell Computer options are of particular concern.
Source: On Wall Street, April 16, 1999
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