India’s Sensex Index Approved
Traders looking to grab some Indian volatility can finally do so with futures on the Bombay Stock Exchange (BSE) Sensitive Index (Sensex), thanks to a CFTC “no action” letter issued in June. The BSE, located in Mumbai (the English name Bombay was dropped in 1995) is the first Indian exchange to receive the allowance, but certainly won’t be the last.
Futures on Floating Yuan
The CME will launch three currency-cross futures on the Chinese yuan (also known as the renminbi) on Aug. 27. The crosses will be yuan/dollar, yuan/euro, and yuan/yen.
Dubai Builds Pitless Floor
The Dubai Mercantile Exchange (DME) has broken ground on its 500 square-meter “trading floor” within the financial free zone known as the Dubai International Financial Centre (DIFC). The floor will not have open outcry pits but hubs for cash and derivatives energy traders using the exchange’s electronic matching engine. The DME is a 50/50 joint venture between Nymex and the semi-governmental Tatweer Dubai Limited. Trading in Oman crude oil futures is slated to begin later this year.
Bond Index Futures gets go
Looking to trade futures on a basket of corporate debt? The SEC and CFTC have given the go-ahead, provided the underlying cash bonds are deep and liquid enough to prevent manipulation.
Under final rules issued July 10, the agencies agreed on terms to exclude debt securities that meet specific criteria from the definition of a narrow based security index. Any bond index that meets the criteria will be treated as a broad-based index and will be regulated exclusively by the CFTC, while any indexes that are either based on a single debt security or fail to meet the criteria will be regulated jointly by teh CFTC and the SEC.
In a nutshell, an index will be considered broad based if it is comprised of 10 or more issuers, of which the most highly weighted accounts for nor more than 30% of the index, and the top five issuers add up to no more than 60% of index. Each individual component has to have an issue size of at least $250 million, and a series of other disjunctive standards also apply to each issuer.
