Release: #4559-01
For Release: August 22, 2001

CFTC Recognizes New Joint Venture Exchange for Single-Stock Futures

Washington D.C. -- The Commodity Futures Trading Commission (CFTC) yesterday granted contract market designation, subject to certain conditions regarding final specification of clearing and self-regulatory arrangements, to Nasdaq LIFFE, LLC Futures Exchange (Nasdaq LIFFE). This is the CFTC’s first exchange designation to permit trading of futures contracts on individual securities and narrow-based securities indices (together, security futures products or SFPs) as the CFTC continues with its implementation of the Commodity Futures Modernization Act of 2000 (CFMA) that lifted an almost twenty-year ban on these contracts.

Nasdaq LIFFE is a joint venture between The Nasdaq Stock Market, Inc. and the London International Financial Futures and Options Exchange (LIFFE). According to the exchange’s application for designation, The National Association of Securities Dealers, Inc. (NASD), through its NASD Regulation (NASDR) subsidiary, will perform certain self-regulatory functions for the new exchange, including market and financial surveillance, audits, and trade practice investigations. NASDR will also process applications from Nasdaq LIFFE members or affiliates for direct access to the Nasdaq LIFFE Trading System. Another NASD subsidiary will provide dispute resolution services. LIFFE will provide the trading platform, as well as ongoing technical support, and will carry out real-time market surveillance services for the joint venture.

The Options Clearing Corporation (OCC) will provide clearing and settlement services for the new exchange. Under the Nasdaq LIFFE rules, all trading must be conducted through exchange members and their authorized employees. Such members must either be clearing members of OCC or have a clearing arrangement with an OCC clearing member. Only clearing members of OCC are eligible to act as Nasdaq LIFFE clearing members and each must meet OCC’s minimum capital requirements.

Copies of the CFTC’s order and other supporting material prepared by CFTC staff 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.