From the January 01, 2010 issue of Futures Magazine • Subscribe!

CFTC, SEC issue product orders

When the CFTC and SEC held their harmonization meetings last fall, industry leaders requested a swifter method for new product approvals. The two agencies responded in mid November issuing two joint orders on volatility indexes and security futures. The first order makes it possible for Eurex to offer its Dax-index tracking VDAX futures contract in the United States, while the second allows OneChicago, which is dually regulated by the SEC and CFTC, to file for new product approvals in the same way as options exchanges.

“It is encouraging to see the cooperation between the SEC and the CFTC on our filing for comparable listing standards to the options exchanges. It does appear that Chairman Schapiro and Chairman Gensler have affected the interaction between the agencies in a positive way,” says David Downey, CEO of OneChicago. However, he adds, “We applied for this ruling more than a year ago. We have other filings waiting for joint approval that are over a year in waiting despite both agencies agreeing on the proposal. We remain hopeful that can change.” He says that OneChicago has increased products, but not under the standards of the ruling. OneChicago issued 40 new single stock futures on Dec. 11.

Andy Nybo, head of derivatives at Tabb Group, says the orders are an indication that the SEC and CFTC plan to work closer on their regulatory implementations in the future, which would be a benefit for options and futures market participants. “The rule making process to approve new options products is a long, drawn-out process. Any efforts to streamline the approval process to mimic the CFTC approval process would be a huge benefit,” he says.

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