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These rules provide methods of calculation and guidance for nationwide securities exchanges, designated contract markets, registered DTEFs, and overseas boards of trade in figuring out whether a security index is narrow-primarily based underneath the Exchange Act. Securities Markets Coalition ("Coalition"),139 raised considerations over sure tax implications that these markets believe consequence from the definition of slim-based mostly security index and the rules as proposed. As well as, the SEC believes that it's not empowered to undertake the equal of CEA Rule 41.14 beneath the Exchange Act, which gives relief for futures on indexes that develop into broad-based mostly, as a result of the SEC has no jurisdiction over broad-based mostly security index futures. The SEC additionally obtained several comments regarding potential costs that is likely to be incurred until completely different standards for the definition of slender-based security index are adopted to accommodate indexes comprised of foreign securities.170 The SEC notes that the Commissions have adopted Rules 41.13 below the CEA and 3a55-3 under the Exchange Act, which set up that when a futures contract on a safety index is traded on or subject to the principles of a international board of commerce, that index won't be considered a narrow-primarily based safety index if it wouldn't be a slender-based mostly security index if a futures contract on such index had been traded on a designated contract market or registered DTEF.

Two commenters raised points regarding the remedy of futures on Exchange Traded Funds.140 The Commissions believe that these issues fall outdoors the scope of the present rulemaking and won't handle them in this context. The current burden hour estimate for Rule 17a-1, as of July 20, 1998, is 50 hours per yr for each exchange.160 Within the Proposing Release, the SEC estimated that it could take each of the 11 nationwide securities exchanges, together with notice-registered nationwide securities exchanges, expected to trade futures contracts on safety indexes one hour annually to retain any documents made or acquired by it in determining 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 legal guidelines incorporate by reference the definition of narrow-based mostly security index in the Exchange Act. 2. Burden Hours National securities exchanges, together with notice-registered national securities exchanges, that trade futures contacts on safety indexes might be required to adjust to the recordkeeping necessities underneath Rule 17a-1. National securities exchanges, together with discover-registered national securities exchanges, will probably be required to retain and retailer any documents associated to determinations made using the definitions in Exchange Act Rule 3a55-1 for a minimum of 5 years, the primary two years in an simply accessible place.

The CFMA requires that the determinations as to market capitalization and greenback value of ADTV, and thus the status of a securities index as slim-primarily based or broad-based, be made, while Exchange Act Rule 17a-1 simply requires that such determinations be retained. Accordingly, to comply with  https://Coin-viewer.com  recordkeeping necessities, a national securities exchange, including a notice-registered national securities exchange, that lists or trades futures contracts on slender-based mostly security indexes will likely be required to preserve information of any calculations used to find out whether or not an index is slim-based mostly.158 B. Total Annual Reporting and Recordkeeping Burden 1. Capital Costs Rule 17a-1 under the Exchange Act requires a national securities exchange, together with any notice-registered nationwide securities exchange, that trades futures contracts on a slender-based security index to keep on file for a interval of no lower than 5 years, the first two years in an simply accessible place, all information concerning their determinations that such indexes had been narrow-primarily based. This commenter famous that a single compiler of the lists will end in consistent treatment of futures on security indexes.

The CFMA lifted the ban on the buying and selling of futures on single securities and on slender-primarily based 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 foundations to develop into efficient on August 21, 2001, so that eligible contract contributors may begin trading the new products as contemplated by the CFMA. The CFMA gives that principal-to-principal transactions between sure eligible contract participants in safety futures merchandise may begin on August 21, 2001, or such date that a futures affiliation registered beneath 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 buying and selling of, futures contracts on single securities and on slim-based security indexes. The SEC proposed these guidelines on May 17, 2001. The preliminary remark period for the rules expired on June 18, 2001. The remark interval, nonetheless, was extended by the CFTC and the SEC till July 11, 2001. After reviewing and considering the comments received, the SEC is adopting the foundations, which give the methods for markets to find out whether or not a safety index is slender-primarily based or broad-primarily based as required by the Exchange Act, as amended by the CFMA.