Today, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) announced proposed rules that will permit trading of futures on debt indexes. Futures contracts on debt indices that are allowed under the proposed rules would trade on futures exchanges subject to regulation by the CFTC. Security futures on debt securities could be traded on futures exchanges and securities exchanges subject to regulation by the CFTC and SEC.
The proposed rules provide that a future on a debt security index not subject to SEC regulation must be broad-based, a requirement purportedly designed to insure that the securities making up the index are not readily susceptible to manipulation. According to the SEC and CFTC, the rules will clarify the definition of a "narrow-based security index," providing criteria that are specifically relevant to debt securities.
Comments on the proposed rules will be due within 30 days of their publication in the Federal Register. The agencies expect to adopt final rules by June 30, 2006.
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