Section 1a(25)(B)(v) of the Commodity Exchange Act (CEA), 7 USC 1a(25)(B)(v), established a temporary “grandfather” provision permitting the offer and sale in the U.S. of security index futures traded on or subject to the rules of foreign boards of trade if the futures contracts were authorized by the CFTC before the Commodity Futures Modernization Act of 2000 (CFMA) was enacted. Specifically, this exclusion provided that, until June 21, 2002, a security index is not a narrow-based security index if:
1. the future on the index is traded on or subject to the rules of a foreign board of trade;
2. the offer and sale in the United States of a futures contract on the index was authorized before the date of enactment of the CFMA; and
3. the conditions of such authorization continue to be met.
Prior to the effective date of the CFMA, these futures contracts were authorized to be offered to U.S. customers pursuant to no-action letters issued by the CFTC and its staff, to which the Securities and Exchange Commission (SEC) did not object.
To prevent disruption to market participants, the SEC and CFTC permanently extended the exclusion in Section 1a(25)(B)(v) of the CEA beyond June 21, 2002. Thus, each such index continues to be excluded from the definition of a narrow-based security index, provided that it continues to be traded on or subject to the rules of a foreign board of trade and the conditions under which the offer and sale of a futures contract on the index in the United States was authorized continue to be met. If these conditions are met, such indexes are broad-based security indexes and futures on those indexes are regulated exclusively by the CFTC, unlike security futures products that are jointly regulated by the CFTC and SEC.
Below is a list of the security indexes underlying futures contracts that received CFTC no-action relief prior to the enactment of the CFMA on December 21, 2000 and which are broad-based security indexes. The indexes are listed alphabetically by exchange.
AE – The Amsterdam Exchanges (formed by merger of Financiele Termijnmarkt Amsterdam and European Options Exchange)
EUREX – Eurex Deutschland (formerly DTB, Deutsche Terminbörse)
HKFE – Hong Kong Futures Exchange
INTEX – International Futures Exchange (Bermuda) Ltd.
IDEM – Italian Stock Exchange (Mercato Italiano dei Derivati)
LIFFE – London International Financial Futures and Options Exchange
MEFF RV (Meff Renta Variable) – Meff Sociedad Holding Rectora de Productos Financieros Derivados, S.A. (Spain)
ME – Montreal Stock Exchange
MONEP – Marché des Options Négociables de Paris
OM London Exchange Ltd. (formerly OMLX, London Securities and Derivatives Exchange, Ltd.)
OM – OM Stockholm Exchange AB
OSE – Osaka Stock Exchange
SGX-DT – Singapore Exchange Derivatives Trading, Ltd. (formerly SIMEX, the Singapore International Monetary Exchange)
SFE – Sydney Futures Exchange Ltd.
TSE – Tokyo Stock Exchange
TFE – Toronto Futures Exchange