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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (8501)	10/28/2000 10:03:06 AM
From: LPS5	Read Replies (3) \| Respond to of 12617

The original ban on single stock futures was, for the most part, a result of two factors: the first had to do with regulatory turf ambiguities between the SEC and the CFTC; the second was the inability of technology to accomodate the type, and number, of transactions implied by trading futures on individual stock issues. The former is being worked out as we speak (type); the latter has been well within the realm of technological possibility for quite some time now. With regard to leverage, you make a decent point, but the regulatory and structural measures around the futures/commodities markets...daily tick limits, intraday margin calls ("variation calls"), the presence of (actual) hedgers & more restrictive leverage for "pure" speculators, etc. - on top of the fact that, IMO, many individuals will simply be intimidated by the prospect of futures trading - will probably keep those who are predisposed to getting overleveraged from treading into such waters. From the point of view of forcing short term stock moves, I don't imagine that single stock futures would be offered on stocks that are, for example, outside the DJIA or the top 10 or so issues in the NASDAQ 100, such that the covered issues are liquid and widely-held. The possibility of formidible arbitrage strategies would most likely, in addition, keep the pricing disparities between the issues and underlying derivatives from becoming excessive. I mean, can you imagine the arbitrage opportunities presented by a stock that has 1) warrants/rights outstanding, 2) perhaps a secondary offering coming to market, 3) convertible bonds, 4) options, and 5) futures traded on it?! Not to mention if the issue is in a particular stock index which itself has options and futures traded on it... :) LPS5