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Single stock futures are called contract for a difference (CFDs) over here
and are traded in the UK already. Quite useful for shorting in particular,
without having to worry about repo.
Gwenn
Ira Tunik wrote:
> Long but worth reading if you are interested in the direction of trading
> instrucments, if not delete. Ira.
>
> By Will Acworth, Bridge News
>
> Washington--Mar 2--Despite pressure from
> Congress, US securities and futures regulators
> have failed to reach an agreement on how to
> regulate futures on individual stocks. In a letter
> sent to Congress Thursday, the regulators said
> they were willing to share responsibility for
> regulating these products, but said it will take
> several more months to draft legislation.
>
> * * *
>
> The letter was sent to Senate Agriculture
> Committee Chairman Richard Lugar, R-Ind., and
> Senate Banking Committee Chairman Phil Gramm,
> R-Texas. Those 2 lawmakers had asked the SEC
> and CFTC last December to come up with a
> regulatory framework proposal by Feb 21, and
> are likely to be disappointed by the delay in
> reaching an accord.
>
> Single-stock futures are not permitted to trade
> on US exchanges under current US laws, but
> there is a growing consensus among regulators
> and industry officials that the time has come to
> lift this prohibition.
>
> Lawmakers therefore asked the Securities and
> Exchange Commission and the Commodity
> Futures Trading Commission last year to suggest
> a framework for regulating these products, with
> the idea of incorporating this into legislation and
> enacting it into law this year.
>
> The letter, which was signed by SEC Chairman
> Arthur Levitt and CFTC Chairman William Rainer,
> said the 2 agencies have reached agreement on
> several general principles that should guide the
> regulation of single-stock futures. H owever, the
> letter also gave a long list of " important issues"
> that remain to be resolved.
>
> For example, the 2 agencies agreed that the SEC
> should "take the lead" in combating insider
> trading involving single-stock futures. They also
> agreed that firms should have to register with
> only one agency to sell these futures, so long as
> the firms provide some sort of notice to the
> other agency.
>
> "CFTC and SEC staffs also have reached
> tentative agreement on initial standards for
> trading single-stock futures, such as harmonizing
> margin requirements, restricting dual trading,
> testing sales and supervisory personnel, and
> establishing uniform listing standards," the letter
> said.
>
> One area where agreement was not reached was
> duplicate regulation. A firm registered with one
> agency should not have to comply with the
> entire regulatory rulebook of the other agency,
> the letter said. However, some "core provisions"
> will have to be maintained, and just what those
> core provisions should be has not been resolved.
>
> "The agencies agree to work diligently in the
> coming months to reach a further consensus on
> the regulatory issues and to provide a
> comprehensive legislative proposal to your
> Committees...before Congress adjourns," Levitt
> and Rainer told Lugar and Gramm.
> "Notwithstanding the many challenges that we
> face, we believe it is possible to craft a strong
> yet flexible regulatory framework for single stock
> futures. "
>
> The failure to reach an agreement on
> single-stock futures will be a disappointment to
> US futures exchanges, and to the Chicago
> Mercantile Exchange in particular. The CME has
> found great success in recent years in offering
> various types of equity index futures to
> institutional and retail customers, and has
> persistently urged Congress to end the ban on
> single-stock futures.
>
> However, there are other interests that will
> welcome the delay. Democrats on the House
> Commerce Committee are pressuring the SEC not
> to weaken customer protection and market
> integrity regulations, and securities exchanges
> are worried that these futures will draw volume
> away from their trading floors. End
>
> Bridge News, Tel: (202) 220-3751
>
> Send comments to Internet address:
> futures@xxxxxxxxxx
>
> Would you like to email or fax this story
> to a friend?
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