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The futures exchanges want to peddle single stock futures because it
will allow them to end-run all the margin requirements and regulation
imposed on the NYSE and NASDAQ. Compared to the SEC, the CFTC is an
effective regulator for retail customers, nor is there any equivalent to
the SIPC. I can imagine the consequence of hot stocks being available in
futures. Personally, I think the futures exchanges should have a bit
more leeway in creating futures for some of the sector and other
specialty indexes and the prohibition on individual stocks should be
left in place.
Earl
----- Original Message -----
From: "Daniel Goncharoff" <Daniel.Goncharoff@xxxxxxxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, March 03, 2000 9:40 AM
Subject: [RT] Re: Stock futures.
> Can anyone explain why you would even consider single stock futures
instead of
> just loosening margin requirements and eliminating the uptick rule?
Plus consider
> the administrative burden introduced to monitor insider trading, front
running,
> etc. in both the futures and the stocks at the same time (of course,
we have that
> same burden for options now, so it IS managable).
>
> Regards
> DanG
>
> I4Lothian@xxxxxxx wrote:
>
> > We already have single stock futures here, they are called synthetic
futures
> > by buying a put and selling a call at the same strike on the options
on a
> > stock, or visa versa.
> >
> > Thus, you can effectively use futures-like equivalent to hedge or
trade
> > stock, but it is costly and cumbersome. The time is now to change
the laws
> > and open the U.S. markets to innovation before some offshore
non-U.S.
> > exchange creates the market and attracts the volume.
> >
> > I believe single stock futures would attract additional volume to
stocks and
> > create additional arbitrage opportunities which will only help
liquidity in
> > the underlying stocks. Combine that with a central time price order
book for
> > stocks and I think you have some efficient markets and an up to date
> > regulatory structure in the making.
> >
> > Regards,
> >
> > John J. Lothian
> >
> > Disclosure: Futures trading involves financial risk, lots of it!
>
>
>
>
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