Release: #4556-01
For Release: August 21, 2001

CFTC Final Rules Provide Notice-Designation Procedures for Securities Exchanges that Plan to Trade Single-Stock Futures

Washington, D.C. - The Commodity Futures Trading Commission (CFTC) continues with its implementation of the Commodity Futures Modernization Act of 2000 (CFMA) by adopting regulations that establish procedures whereby national securities exchanges, national securities associations, and alternative trading systems may be “notice-designated” as contract markets in security futures products. In accordance with the directives of the CFMA, the CFTC has promulgated these streamlined procedures to allow for such designation contemporaneously with the filing of the required notice.

These rules were adopted on the eve of the date on which the CFMA first permits institutional trading of security futures products, which are futures contracts based on either individual securities or on narrow-based security indices. The rules implement section 5f of the Commodity Exchange Act (Act), as established by section 252(a) of the CFMA.

In addition to providing a simple procedure for notice-designation, the rules also establish certain reporting obligations, provide exemptions from the requirements of section 6(a) of the Act and Parts 38 and 40 of the CFTC’s regulations, and allow notice-designated contract markets to apply for exemptions from other provisions of the Act or regulations.

Acting Chairman James E. Newsome had this comment regarding the new rules: “I am pleased that the Commission today has finalized these regulations that capture what I view as the intended concept of notice-designation for security futures product markets. It is my goal to ensure that these products trade free from unnecessary or duplicative regulation and I believe today's rules serve to further accomplish that goal."

These regulations will be published shortly in the Federal Register and will become effective immediately. Copies may be obtained by contacting the Commission's Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or by accessing the Commission's website,