These guidelines provide methods of calculation and steerage for nationwide securities exchanges, designated contract markets, registered DTEFs, and overseas boards of commerce in determining whether or not a safety index is narrow-primarily based under the Exchange Act. Securities Markets Coalition ("Coalition"),139 raised considerations over certain tax implications that these markets imagine outcome from the definition of slender-based security index and the principles as proposed. In addition, the SEC believes that it is not empowered to undertake the equivalent of CEA Rule 41.14 beneath the Exchange Act, which provides relief for futures on indexes that turn out to be broad-primarily based, because the SEC has no jurisdiction over broad-based safety index futures. https://rentry.co/387r8 acquired several feedback concerning potential prices that may be incurred until completely different standards for the definition of slender-primarily based security index are adopted to accommodate indexes comprised of overseas securities.170 The SEC notes that the Commissions have adopted Rules 41.Thirteen under the CEA and 3a55-3 beneath the Exchange Act, which set up that when a futures contract on a safety index is traded on or topic to the principles of a international board of trade, that index is not going to be thought of a narrow-primarily based security index if it would not be a slim-based mostly safety index if a futures contract on such index had been traded on a chosen contract market or registered DTEF.
Two commenters raised issues concerning the therapy of futures on Exchange Traded Funds.140 The Commissions consider that these points fall exterior the scope of the current rulemaking and is not going to handle them in this context. The present burden hour estimate for Rule 17a-1, as of July 20, 1998, is 50 hours per year for each exchange.160 In the Proposing Release, the SEC estimated that it would take each of the 11 national securities exchanges, together with notice-registered nationwide securities exchanges, expected to commerce futures contracts on security indexes one hour yearly to retain any paperwork made or obtained by it in determining whether an index is a slim-based mostly safety index. As to the willpower of which indexes qualify as broad-based and which are handled as slim-based, the tax laws incorporate by reference the definition of slim-based security index within the Exchange Act. 2. Burden Hours National securities exchanges, together with discover-registered nationwide securities exchanges, that commerce futures contacts on safety indexes will be required to comply with the recordkeeping requirements below Rule 17a-1. National securities exchanges, together with discover-registered national securities exchanges, will be required to retain and retailer any documents related to determinations made using the definitions in Exchange Act Rule 3a55-1 for at least five years, the primary two years in an simply accessible place.
The CFMA requires that the determinations as to market capitalization and greenback worth of ADTV, and thus the status of a securities index as narrow-primarily based or broad-primarily based, be made, whereas Exchange Act Rule 17a-1 simply requires that such determinations be retained. Accordingly, to adjust to these recordkeeping requirements, a nationwide securities exchange, including a notice-registered national securities exchange, that lists or trades futures contracts on narrow-primarily based safety indexes will be required to preserve data of any calculations used to determine whether or not an index is narrow-based mostly.158 B. Total Annual Reporting and Recordkeeping Burden 1. Capital Costs Rule 17a-1 underneath the Exchange Act requires a nationwide securities exchange, including any discover-registered national securities exchange, that trades futures contracts on a slim-primarily based safety index to carry on file for a interval of no less than 5 years, the first two years in an simply accessible place, all information regarding their determinations that such indexes were narrow-based. This commenter noted that a single compiler of the lists will result in constant remedy of futures on safety indexes.
The CFMA lifted the ban on the trading of futures on single securities and on narrow-primarily based security indexes and established a framework for the joint regulation of these merchandise by the CFTC and the SEC. The CFTC believes good cause exists for the rules to change into effective on August 21, 2001, so that eligible contract participants might begin trading the brand new products as contemplated by the CFMA. The CFMA supplies that principal-to-principal transactions between certain eligible contract individuals in security futures products could start on August 21, 2001, or such date that a futures association registered below Section 17 of the CEA meets the necessities in Section 15A(ok)(2) of the Exchange Act.143 The CFMA lifted the ban on, and permits the buying and selling of, futures contracts on single securities and on narrow-primarily based safety indexes. The SEC proposed these guidelines on May 17, 2001. The preliminary remark interval for the foundations expired on June 18, 2001. The comment period, nonetheless, was prolonged by the CFTC and the SEC until July 11, 2001. After reviewing and contemplating the feedback acquired, the SEC is adopting the principles, which give the strategies for markets to determine whether or not a security index is slender-based mostly or broad-based as required by the Exchange Act, as amended by the CFMA.