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These guidelines provide strategies of calculation and steering for nationwide securities exchanges, designated contract markets, registered DTEFs, and international boards of commerce in figuring out whether or not a safety index is slim-primarily based underneath the Exchange Act. Securities Markets Coalition (“Coalition”),139 raised considerations over certain tax implications that these markets consider result from the definition of slender-primarily based security index and the foundations as proposed. As well as, the SEC believes that it’s not empowered to adopt the equivalent of CEA Rule 41.14 beneath the Exchange Act, which supplies relief for futures on indexes that become broad-based mostly, as a result of the SEC has no jurisdiction over broad-based mostly safety index futures. The SEC additionally received a number of feedback relating to potential costs that may be incurred except totally different standards for the definition of slender-based security index are adopted to accommodate indexes comprised of international 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 security index is traded on or subject to the principles of a overseas board of trade, that index is not going to be thought-about a slim-based safety index if it wouldn’t be a narrow-based security index if a futures contract on such index have been traded on a chosen contract market or registered DTEF.

Two commenters raised issues regarding the therapy of futures on Exchange Traded Funds.140 The Commissions believe that these points fall exterior the scope of the present rulemaking and will not handle them on this context. The present burden hour estimate for Rule 17a-1, as of July 20, 1998, is 50 hours per yr for each exchange.160 In the Proposing Release, the SEC estimated that it would take every of the 11 national securities exchanges, together with notice-registered national securities exchanges, anticipated to trade futures contracts on security indexes one hour yearly to retain any paperwork made or obtained by it in figuring out whether or not an index is a slim-primarily based security index. As to the determination of which indexes qualify as broad-primarily based and that are treated as narrow-primarily based, the tax legal guidelines incorporate by reference the definition of narrow-based mostly security index within the Exchange Act. 2. Burden Hours National securities exchanges, including notice-registered nationwide securities exchanges, that commerce futures contacts on security indexes can be required to comply with the recordkeeping requirements beneath Rule 17a-1. National securities exchanges, including discover-registered nationwide securities exchanges, will probably be required to retain and retailer any paperwork associated to determinations made using the definitions in Exchange Act Rule 3a55-1 for no less than 5 years, the primary two years in an easily accessible place.

The CFMA requires that the determinations as to market capitalization and dollar value of ADTV, and thus the standing of a securities index as slim-based mostly or broad-primarily based, be made, while Exchange Act Rule 17a-1 simply requires that such determinations be retained. Accordingly, to adjust to these recordkeeping necessities, a nationwide securities exchange, together with a notice-registered national securities exchange, that lists or trades futures contracts on slender-primarily based safety indexes shall be required to preserve data of any calculations used to determine whether or not an index is slender-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 national securities exchange, that trades futures contracts on a slender-based security index to keep on file for a period of no less than five years, the first two years in an easily accessible place, all information regarding their determinations that such indexes have been slender-primarily based. This commenter famous that a single compiler of the lists will lead to constant therapy of futures on safety indexes.

The CFMA lifted the ban on the buying and selling of futures on single securities and on narrow-based mostly security indexes and established a framework for the joint regulation of those merchandise by the CFTC and the SEC. The CFTC believes good trigger exists for the principles to turn out to be efficient on August 21, 2001, so that eligible contract contributors may start buying and selling the brand youtube.com new products as contemplated by the CFMA. The CFMA offers that principal-to-principal transactions between sure eligible contract individuals in safety futures products could commence on August 21, 2001, or such date that a futures affiliation registered underneath Section 17 of the CEA meets the requirements 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-based mostly security indexes. The SEC proposed these rules on May 17, 2001. The preliminary remark interval for the foundations expired on June 18, 2001. The comment period, however, was extended by the CFTC and the SEC until July 11, 2001. After reviewing and considering the feedback received, the SEC is adopting the foundations, which provide the strategies for markets to determine whether a safety index is narrow-primarily based or broad-primarily based as required by the Exchange Act, as amended by the CFMA.