These guidelines present methods of calculation and steerage for nationwide securities exchanges, designated contract markets, registered DTEFs, and foreign boards of trade in figuring out whether a safety index is slender-based underneath the Exchange Act. Securities Markets Coalition ("Coalition"),139 raised issues over sure tax implications that these markets consider outcome from the definition of slender-primarily based safety index and the principles as proposed. In addition, the SEC believes that it isn't empowered to undertake the equal of CEA Rule 41.14 beneath the Exchange Act, which supplies relief for futures on indexes that develop into broad-based mostly, because the SEC has no jurisdiction over broad-based security index futures. The SEC additionally received a number of comments relating to potential prices that may be incurred except completely different standards for the definition of slender-primarily based safety index are adopted to accommodate indexes comprised of international securities.170 The SEC notes that the Commissions have adopted Rules 41.13 below the CEA and 3a55-3 below the Exchange Act, which establish that when a futures contract on a safety index is traded on or subject to the rules of a foreign board of trade, that index is not going to be thought-about a narrow-based security index if it wouldn't be a slender-based safety index if a futures contract on such index were traded on a designated contract market or registered DTEF.
Two commenters raised issues concerning the remedy of futures on Exchange Traded Funds.140 The Commissions believe that these points fall outside the scope of the present rulemaking and won't tackle them on this context. The current burden hour estimate for Rule 17a-1, as of July 20, 1998, is 50 hours per yr for every exchange.160 In the Proposing Release, the SEC estimated that it would take every of the eleven nationwide securities exchanges, including discover-registered nationwide securities exchanges, anticipated to commerce futures contracts on safety indexes one hour annually to retain any paperwork made or received by it in determining whether or not an index is a slim-primarily based safety index. As to the willpower of which indexes qualify as broad-based and which are handled as slim-primarily based, the tax legal guidelines incorporate by reference the definition of slim-based mostly safety index within the Exchange Act. 2. Burden Hours National securities exchanges, including notice-registered nationwide securities exchanges, that commerce futures contacts on security indexes might be required to adjust to the recordkeeping requirements below Rule 17a-1. National securities exchanges, including discover-registered nationwide securities exchanges, will be required to retain and store any paperwork related to determinations made using the definitions in Exchange Act Rule 3a55-1 for a minimum of five years, the first two years in an simply accessible place.
The CFMA requires that the determinations as to market capitalization and dollar value of ADTV, and thus the standing of a securities index as slim-primarily based or broad-based, be made, while Exchange Act Rule 17a-1 merely requires that such determinations be retained. Accordingly, to adjust to these recordkeeping requirements, a nationwide securities exchange, together with a discover-registered national securities exchange, that lists or trades futures contracts on slender-based security indexes will likely be required to preserve data of any calculations used to find out whether an index is slim-primarily based.158 B. Total Annual Reporting and Recordkeeping Burden 1. Capital Costs Rule 17a-1 below the Exchange Act requires a national securities exchange, together with any notice-registered nationwide securities exchange, that trades futures contracts on a slim-primarily based safety index to carry on file for a interval of no lower than five years, the primary two years in an easily accessible place, all data regarding their determinations that such indexes had been slim-based. This commenter noted that a single compiler of the lists will result in constant treatment of futures on security indexes.
The CFMA lifted the ban on the buying and selling of futures on single securities and on narrow-based safety indexes and established a framework for the joint regulation of these merchandise by the CFTC and the SEC. https://simonhauville.com/contents/%eb%b0%94%ec%9d%b4%eb%b9%84%ed%8a%b8%ec%99%80-%ec%9d%b4-%ec%95%94%ed%98%b8%ed%99%94%ed%8f%90-%ea%b1%b0%eb%9e%98%ec%86%8c-%ed%94%8c%eb%9e%ab%ed%8f%bc%ec%97%90-%eb%8c%80%ed%95%b4-%ec%95%8c%ec%95%84/ believes good cause exists for the principles to grow to be efficient on August 21, 2001, so that eligible contract participants could begin buying and selling the new products as contemplated by the CFMA. The CFMA supplies that principal-to-principal transactions between sure eligible contract contributors in security futures products may start on August 21, 2001, or such date that a futures affiliation registered below Section 17 of the CEA meets the requirements in Section 15A(k)(2) of the Exchange Act.143 The CFMA lifted the ban on, and permits the trading of, futures contracts on single securities and on narrow-primarily based safety indexes. The SEC proposed these guidelines on May 17, 2001. The initial comment interval for the principles expired on June 18, 2001. The remark interval, nonetheless, was prolonged by the CFTC and the SEC till July 11, 2001. After reviewing and contemplating the feedback acquired, the SEC is adopting the principles, which provide the strategies for markets to find out whether or not a security index is narrow-based mostly or broad-based mostly as required by the Exchange Act, as amended by the CFMA.