CFTC and SEC issue two joint orders related to security-based futures contracts, which clarify jurisdiction

The CFTC and SEC issued two joint orders related to security-based futures contracts that clarify each Commission’s respective jurisdiction and allow additional products to underlie security futures.

The first joint order, which became effective on November 17, excludes certain foreign and domestic volatility indexes that are based on broad-based security indexes from the definition of “narrow-based security index.” As a result of the joint order, futures on foreign and domestic volatility indexes that meet the criteria contained in the joint order are treated as “broad-based security indexes” and subject to the exclusive jurisdiction of the CFTC. Options on such volatility indexes are subject to the federal securities laws and the jurisdiction of the SEC. The second joint order allows security futures products to be based on any security that is eligible to underlie an exchange-listed security option

About The Author

Felix Shipkevich

Felix Shipkevich is a Manhattan-based attorney and general counsel for Shipkevich Law Firm. He has extensive experience working with the CFTC and NFA on registration, compliance, and enforcement issues for CPOs, CTAs, FCMs, IBs, and RFEDs. Felix also practices intellectual property and corporate governance law.