Sec Settles Options Dispute

The Justice Department and the Securities and Exchange Commission Monday agreed to settle accusations of alleged anti-competitive practices in the stock-options business, in return for a promise by the four main options markets to spend $77 million on policing their members.

The deal announced Monday comes 13 months after the markets ended the practice that lay at the heart of the government’s case - the assignment of what the government said were monopoly trading rights at each of the four exchanges.

Stock options give investors the right to purchase or sell shares at a certain fixed price at a set future date, enabling the buyers to gamble on a stock’s entire gain or loss for that period at a fraction of the price of buying a share.

Until last year, some of the most popular options were limited to members of a single exchange. For example, the firm of Spear, Leeds & Kellogg managed all U.S. trading in options of Dell Computer Corp. from its post on the basement floor of the Philadelphia Stock Exchange on Market Street.

Traders at the rival American, Pacific and Chicago Board Options exchanges were barred from trading in Dell, and Philadelphia traders were in turn barred from popular options traded at the other markets.

The Justice Department and the SEC had argued the divvying up of the options market deprived customers of competitive bids from traders at other exchanges.