These guidelines present methods of calculation and steerage for national securities exchanges, designated contract markets, registered DTEFs, and foreign boards of trade in determining whether a security index is narrow-based underneath the Exchange Act. Securities Markets Coalition ("Coalition"),139 raised concerns over sure tax implications that these markets imagine outcome from the definition of narrow-based safety index and the principles as proposed. In addition, the SEC believes that it is not empowered to undertake the equivalent of CEA Rule 41.14 under the Exchange Act, which gives relief for futures on indexes that grow to be broad-primarily based, as a result of the SEC has no jurisdiction over broad-based mostly security index futures. The SEC additionally received several feedback relating to potential prices that might be incurred except totally different criteria for the definition of narrow-based security index are adopted to accommodate indexes comprised of foreign securities.170 The SEC notes that the Commissions have adopted Rules 41.13 beneath the CEA and 3a55-3 below the Exchange Act, which establish that when a futures contract on a security index is traded on or topic to the principles of a international board of trade, that index will not be thought of a narrow-based security index if it would not be a slender-based safety index if a futures contract on such index were traded on a delegated contract market or registered DTEF.
Two commenters raised points concerning the treatment of futures on Exchange Traded Funds.140 The Commissions believe that these points fall exterior the scope of the present rulemaking and won't deal with them in this context. https://coin-viewer.com/ for Rule 17a-1, as of July 20, 1998, is 50 hours per year for every exchange.160 Within the Proposing Release, the SEC estimated that it would take each of the eleven national securities exchanges, including discover-registered national securities exchanges, expected to trade futures contracts on security indexes one hour yearly to retain any documents made or acquired by it in determining whether or not an index is a slender-based security index. As to the willpower of which indexes qualify as broad-primarily based and that are treated as slender-primarily based, the tax legal guidelines incorporate by reference the definition of slender-primarily based security index in the Exchange Act. 2. Burden Hours National securities exchanges, including notice-registered nationwide securities exchanges, that trade futures contacts on safety indexes can be required to comply with the recordkeeping requirements under Rule 17a-1. National securities exchanges, together with discover-registered national securities exchanges, will likely be required to retain and store any paperwork related to determinations made using the definitions in Exchange Act Rule 3a55-1 for a minimum of five 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 narrow-based mostly or broad-based, be made, while Exchange Act Rule 17a-1 simply requires that such determinations be retained. Accordingly, to adjust to these recordkeeping requirements, a national securities exchange, including a discover-registered national securities exchange, that lists or trades futures contracts on narrow-based mostly safety indexes can be required to preserve records of any calculations used to determine whether an index is slender-based.158 B. Total Annual Reporting and Recordkeeping Burden 1. Capital Costs Rule 17a-1 below the Exchange Act requires a national securities exchange, together with any notice-registered national securities exchange, that trades futures contracts on a slender-based safety index to keep on file for a interval of no less than five years, the primary two years in an simply accessible place, all data concerning their determinations that such indexes have been slender-based. This commenter famous that a single compiler of the lists will result in constant remedy of futures on safety indexes.
The CFMA lifted the ban on the buying and selling of futures on single securities and on slim-based safety indexes and established a framework for the joint regulation of these products by the CFTC and the SEC. The CFTC believes good cause exists for the foundations to turn into effective on August 21, 2001, so that eligible contract individuals might begin buying and selling the brand new products as contemplated by the CFMA. The CFMA offers that principal-to-principal transactions between sure eligible contract participants in security futures products could start 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 slender-based mostly safety indexes. The SEC proposed these guidelines on May 17, 2001. The preliminary remark interval for the foundations expired on June 18, 2001. The remark period, nonetheless, was prolonged by the CFTC and the SEC until July 11, 2001. After reviewing and contemplating the feedback obtained, the SEC is adopting the principles, which provide the strategies for markets to determine whether a security index is slender-based mostly or broad-primarily based as required by the Exchange Act, as amended by the CFMA.