Release: 4541-01
For Release: July 11, 2001

CFTC Requests Comments on Its Proposed Rule to Restrict Dual Trading in Security Futures Products

Washington, D.C. – The Commodity Futures Trading Commission (Commission) is seeking public comments on its proposed rule that would restrict dual trading by floor brokers in security futures products. In general, dual trading occurs when, during the same trading session, a floor broker executes customer orders and trades for his or her own account. The rule was mandated by section 4j of the Commodity Exchange Act, as amended by the Commodity Futures Modernization Act of 2000.

Under the proposed rule, the restriction would only affect floor brokers that execute customer orders for security futures products through open outcry on the trading floor of a designated contract market (DCM) or registered derivatives transaction execution facility (DTF). The restriction would not apply to a DCM or DTF on which trading of security futures products is conducted solely through an electronic system for matching bids and offers. In addition, the regulation provides for certain exceptions to the dual trading restriction, including provisions for the correction of errors, customer consent, spread transactions, market emergencies, and unique or special characteristics of an agreement, contract, or transaction, or of the DCM or DTF.

The full text of the proposed rule was published in the Federal Register on July 11, 2001. Copies may be obtained by contacting the Office of the Secretariat, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or by accessing the Commodity Futures Trading Commission website. Comments on the proposed rule must be received by the Commission's Office of the Secretariat on or before August 10, 2001.