SEC and CFTC Still at Work on Single-stock futures
By Christopher Faille, Reporter
Monday, December 31, 2001
WASHINGTON (HedgeWorld.com)—In the hopeful days of spring, the Securities and Exchange Commission and the Commodity Futures Trading Commission both believed that American investors would be trading in single-stock futures by now.
Dec. 21, 2001 (exactly a year after the enactment of the Commodity Futures Modernization Act of 2000) was the target the two agencies set themselves for clearing all the necessary regulatory brush.
When that date came, though, the chairmen of the CFTC and SEC, James E. Newsome and Harvey L. Pitt, put out a joint statement assuring the investing public that they are still hard at work, and expect to complete work early in the second quarter.
Barbara Richards, executive vice president for market development of Nasdaq Liffe Markets, contacted Friday, was sympathetic, although Nasdaq Liffe had hoped to list such instruments as soon as it was permitted.
“No one has the luxury of making plans in a vacuum,” she said, “certainly not an organization like ours that’s organizing a new market, one that requires a sufficient level of support, preparation, and participation by the financial community before it makes sense to make it available.”
Nasdaq Liffe Markets now plans to list single-stock futures at some time in the second quarter of 2002, and is looking forward to that launch.
“Of course, final regulations need to be released and our firms need to work with the final regulations before the market can launch,” but she sees the Dec. 21 statement by the two agencies as a positive, a “voluntary showing of good will and good intentions that can only be helpful in getting this market started.”
The chief issue still unresolved is the margin requirement for trades on single-stock futures.
Chairmen Pitt and Newsome said that the essential goal of any margin requirement will be the avoidance of regulatory arbitrage between security futures on the one hand and exchange-traded options on the other. |
