Release: #4561-01
For Release: August 24, 2001

CFTC AND SEC PROPOSE JOINT RULES RELATING TO TRADING OF SECURITY FUTURES PRODUCTS; CASH SETTLEMENT, TRADING HALTS

Today, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) jointly proposed rules relating to cash settlement and trading halts in markets for futures contracts on individual securities and narrow-based security indexes (together, security futures products or “SFPs”). These rules have been developed in furtherance of the directives of the Commodity Futures Modernization Act of 2000 (CFMA), which lifted the 19-year-old ban on trading such products in the United States.

The two agencies are proposing rules to ensure that final cash settlement of SFPs fairly reflect opening prices of the underlying security or securities, and that trading in SFPs be halted in coordination with regulatory trading halts implemented on the primary listing market and other markets that list for trading the underlying security or related securities. Regulatory trading halts are those that delay, halt, or suspend trading of a security by the listing market as a result of pending news or those that halt trading as a result of circuit breaker trading halts caused by specific declines in the Dow Jones Industrial Average.

The proposed rules will be published in the Federal Register for a 30-day comment period. Copies of these documents can be obtained by contacting the CFTC’s Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, DC 20581, (202) 418-5100 or by accessing the CFTC’s or the SEC’s website at www.cftc.gov and www.sec.gov, respectively.

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