July 24, 2018

CFTC Proposes Rule Update for U.S Markets in Security Futures Products

Washington, DC — The Commodity Futures Trading Commission (CFTC) unanimously approved a proposal to update a rule impacting exchanges that list security futures products (SFPs). The proposal has the potential to provide greater liquidity in SFP trading, which would facilitate risk management for entities using SFPs.

The proposed rule would update an outdated security futures rule that has not kept pace with position limits on security options, which are under the jurisdiction of the Securities and Exchange Commission. The proposed updates would provide exchanges that list SFPs with greater discretion in setting limit levels, allowing the exchanges to provide a more effective risk management tool. This is the first update to the CFTC SFP position limits and position accountability requirements since they were originally issued in 2001.

Specifically, the proposed CFTC SFP Rule will:

• increase the default level of equity SFP position limits to 25,000 (100-share) contracts, from 13,500 (100-share) contracts; and
• modify the criteria for setting a higher level of position limits and position accountability levels.

CFTC is seeking public comments on this proposal. The comment period ends 60 days after the proposal’s publication in the Federal Register. Comments may be submitted electronically through the CFTC’s Comment Online process. All comments will be posted on CFTC’s website.