The Securities and Exchange Commission and the Commodity Futures Trading Commission have together issued rules for trading futures on debt indices and debt securities. The joint rule-making is necessary because under current regulations, trading futures on debt and debt indices is “essentially forbidden,” according to an SEC statement, noting that federal law gives the agencies together authority to permit such trading. The final rules provide that futures on a debt security index that is not subject to SEC regulation must be “broad-based,” a requirement designed ”to ensure that the securities making up the index are not readily susceptible to manipulation.” The SEC says the rules will exempt certain debt indices from the definition of a “narrow-based security index,” as the commission will provide criteria that are “specifically relevant to debt securities.” Says CFTC Chairman Reuben Jeffery III: “These standards will free exchanges to offer, and investors to trade, these important risk-management products.”
