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To: TFF who wrote (8490)	10/19/2000 2:27:57 PM
From: LPS5	Read Replies (2) \| Respond to of 12617

House Set to Vote on Futures Law Overhaul, Single-Stock Futures Washington, Oct. 19 (Bloomberg) -- The U.S. House was poised to vote as early as this afternoon on legislation that would reduce rules for futures markets, permit single-stock futures and prevent the government from regulating over-the-counter derivatives. The House Rules Committee last night approved putting the measure to a floor vote under suspension of the rules, a process that limits debate and requires a two-thirds majority to pass. Futures exchanges, banks and securities firms say if Congress doesn't approve legislation this year, much of the multitrillion- dollar futures and derivatives market will move overseas. With lawmakers hoping to adjourn next week, time is running out. Overhaul legislation would ``maintain the competitiveness of American financial markets, reduce systemic risk, and create much needed legal certainty for over-the-counter derivatives,'' Treasury Secretary Lawrence Summers said in a statement last month, after he and other federal regulators agreed that the Commodity Futures Trading Commission and the Securities and Exchange Commission should share oversight of single-stock futures. Leaders of the House Agriculture, Banking and Commerce committees labored for weeks to reach a compromise on the three different measures the panels passed this summer. The consensus version of the bill is backed by banking, futures and securities interests. More significantly, some stock markets that opposed the introduction of single-stock futures said they did not object to House passage of the measure as long as their remaining concerns are addressed in the Senate. Stock exchanges want legislation that provides ``investor protection, the maintenance of fair and orderly markets, and a fair competitive environment with stock and stock options traded on the nation's securities markets,'' said a letter from the Chicago Board Options Exchange, the American Stock Exchange and eight other securities market institutions to House Speaker Dennis Hastert, an Illinois Republican. Bill's Fate in Doubt Still, opposition from House Democrats, who had little say in drafting the legislation, could be enough to kill it. And even if the House passes it, it's unclear whether the Senate will follow suit. Senate Banking Committee Chairman Phil Gramm, a Texas Republican, has expressed concern about whether the bill does enough to keep the SEC from regulating OTC derivatives. ``We saw the latest version of what the House is planning to bring up when we came in at 9 a.m.,'' Gramm spokeswoman Christi Harlan said. ``We haven't really had a chance to go through it.'' The bill would put into law regulators' recommendation to ensure that the government, especially the CFTC, refrains from regulating OTC derivatives, which are private contracts based on an underlying bond, security, commodity, currency or other asset. Though similar to regulated futures, OTC derivatives aren't directly governed by any laws or rules. The legislation would exclude non-agricultural OTC derivatives from CFTC oversight as long as they're sold only to wealthy individuals and institutions. Single-Stock Futures The bill would also lift the 18-year ban on futures based on individual stocks. The Chicago Board of Trade and the Chicago Mercantile Exchange say the new products are vital for futures exchanges to compete with electronic and overseas competitors and options markets. The New York Stock Exchange, Nasdaq and others worry that stock futures would cut into their business by being less regulated and cheaper for investors than stock options. The legislation would also put in place tiered levels of regulation where exchanges abide by core principles, rather than the current system in which futures markets follow the government's strict do's and don'ts of trading. Larger markets with institutional participants would have fewer core principles to follow, while individuals trading in small markets would have more. © Copyright 2000, Bloomberg L.P. All Rights Reserved.