These guidelines provide methods of calculation and guidance for national securities exchanges, designated contract markets, registered DTEFs, and overseas boards of commerce in figuring out whether or not a security index is narrow-based beneath the Exchange Act. Securities Markets Coalition ("Coalition"),139 raised considerations over certain tax implications that these markets imagine end result from the definition of slender-based security index and the foundations as proposed. As well as, the SEC believes that it isn't empowered to undertake the equal of CEA Rule 41.14 below the Exchange Act, which gives relief for futures on indexes that change into broad-primarily based, because the SEC has no jurisdiction over broad-based mostly security index futures. The SEC additionally obtained several comments relating to potential prices that may be incurred unless different standards for the definition of slender-based mostly security index are adopted to accommodate indexes comprised of international securities.170 The SEC notes that the Commissions have adopted Rules 41.Thirteen underneath the CEA and 3a55-3 beneath the Exchange Act, which establish that when a futures contract on a safety index is traded on or subject to the principles of a foreign board of trade, that index won't be considered a slender-based security index if it would not be a slim-based mostly security index if a futures contract on such index had been traded on a delegated contract market or registered DTEF.
Two commenters raised points concerning the therapy of futures on Exchange Traded Funds.140 The Commissions imagine that these issues fall outside the scope of the present rulemaking and won't address them in this context. https://www.youtube.com/@Coin_universe for Rule 17a-1, as of July 20, 1998, is 50 hours per yr for every exchange.160 Within the Proposing Release, the SEC estimated that it might take every of the eleven national securities exchanges, together with notice-registered national securities exchanges, expected to commerce futures contracts on safety indexes one hour annually to retain any documents made or obtained by it in figuring out whether an index is a narrow-primarily based safety index. As to the willpower of which indexes qualify as broad-based and which are handled as slim-based mostly, the tax laws incorporate by reference the definition of slender-based safety index in the Exchange Act. 2. Burden Hours National securities exchanges, including notice-registered nationwide securities exchanges, that commerce futures contacts on safety indexes will probably be required to adjust to the recordkeeping necessities under Rule 17a-1. National securities exchanges, together with discover-registered national securities exchanges, will likely be required to retain and retailer any paperwork related to determinations made using the definitions in Exchange Act Rule 3a55-1 for a minimum of 5 years, the first two years in an easily accessible place.
The CFMA requires that the determinations as to market capitalization and dollar worth of ADTV, and thus the standing of a securities index as slender-based or broad-primarily based, be made, whereas Exchange Act Rule 17a-1 merely requires that such determinations be retained. Accordingly, to adjust to these recordkeeping requirements, a national securities exchange, including a notice-registered nationwide securities exchange, that lists or trades futures contracts on slender-based mostly safety indexes can be required to preserve records of any calculations used to determine whether or not an index is slim-primarily based.158 B. Total Annual Reporting and Recordkeeping Burden 1. Capital Costs Rule 17a-1 beneath the Exchange Act requires a national securities exchange, together with any discover-registered nationwide securities exchange, that trades futures contracts on a slim-based safety index to keep on file for a interval of no less than five years, the first two years in an easily accessible place, all information concerning their determinations that such indexes have been narrow-based. This commenter noted that a single compiler of the lists will result in consistent remedy of futures on security indexes.
The CFMA lifted the ban on the buying and selling 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 develop into efficient on August 21, 2001, so that eligible contract contributors may begin buying and selling the brand new merchandise as contemplated by the CFMA. The CFMA provides that principal-to-principal transactions between sure eligible contract members in security futures products may begin on August 21, 2001, or such date that a futures association registered under Section 17 of the CEA meets the necessities in Section 15A(okay)(2) of the Exchange Act.143 The CFMA lifted the ban on, and permits the trading of, futures contracts on single securities and on narrow-primarily based security indexes. The SEC proposed these rules on May 17, 2001. The initial remark interval for the rules expired on June 18, 2001. The remark interval, nonetheless, was prolonged by the CFTC and the SEC till July 11, 2001. After reviewing and contemplating the feedback received, the SEC is adopting the principles, which give the strategies for markets to find out whether or not a safety index is slender-based or broad-based mostly as required by the Exchange Act, as amended by the CFMA.