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By: Cary J. Meer, Lawrence B. Patent and Evan Glover, K&L Gates
The CFTC and NFA have recently announced changes to their regulatory frameworks that could impact traders and fund managers.
The CFTC is proposing to permit increased trading in security futures products. Separately, NFA has adopted a new Interpretive Notice effective October 31, 2018, which imposes additional disclosure requirements on virtual currency.
CFTC's regulations governing SFP position limit and position accountability standards
On July 31, 2018, the CFTC published for public comment a proposal to update speculative position limit parameters for designated contract markets ("DCM") that list for trading SFPs, which are essentially futures whose underlying instrument is either a "narrow-based" security index (generally, an index of nine or fewer component stocks) or a single equity or debt security. Click here for the proposal. A position limit is a level that, if exceeded, subjects a trader to exchange disciplinary action. A position accountability level is a level that, when reached, requires a trader to provide information to the DCM and consent to halt increasing its position if so ordered by the DCM.
As SFPs are considered both a futures contract and a securities contract, they are regulated by both the U.S. Securities and Exchange Commission (the "SEC") and the CFTC. SFPs and security options serve economically equivalent or similar functions...................... To view our full article Click here
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