These guidelines present strategies of calculation and steerage for nationwide securities exchanges, designated contract markets, registered DTEFs, and overseas boards of commerce in figuring out whether or not a security index is narrow-based underneath the Exchange Act. https://Coin-viewer.com (Coalition),139 raised concerns over sure tax implications that these markets imagine result from the definition of slim-primarily based security index and the principles as proposed. In addition, the SEC believes that it's not empowered to undertake the equivalent of CEA Rule 41.14 under the Exchange Act, which offers relief for futures on indexes that grow to be broad-based mostly, as a result of the SEC has no jurisdiction over broad-based mostly safety index futures. The SEC also received several comments regarding potential costs that could be incurred except completely different standards for the definition of narrow-based mostly safety index are adopted to accommodate indexes comprised of foreign securities.170 The SEC notes that the Commissions have adopted Rules 41.13 underneath the CEA and 3a55-3 beneath the Exchange Act, which establish that when a futures contract on a security index is traded on or subject to the principles of a overseas board of commerce, that index is not going to be considered a slender-based mostly security index if it would not be a slender-primarily based security index if a futures contract on such index have been traded on a chosen contract market or registered DTEF. Two commenters raised points regarding the therapy of futures on Exchange Traded Funds.140 The Commissions imagine that these points fall outdoors the scope of the present rulemaking and is not going to handle them in this context. The current burden hour estimate for Rule 17a-1, as of July 20, 1998, is 50 hours per yr for every exchange.160 Within the Proposing Release, the SEC estimated that it could take each of the 11 national securities exchanges, including discover-registered national securities exchanges, anticipated to trade futures contracts on security indexes one hour annually to retain any paperwork made or received by it in determining whether an index is a slim-based security index. As to the dedication of which indexes qualify as broad-primarily based and that are handled as slender-based, the tax legal guidelines incorporate by reference the definition of narrow-based mostly security index within the Exchange Act. 2. Burden Hours National securities exchanges, including notice-registered nationwide securities exchanges, that commerce futures contacts on security indexes will probably be required to comply with the recordkeeping requirements underneath Rule 17a-1. National securities exchanges, including discover-registered national securities exchanges, shall be required to retain and retailer any paperwork related to determinations made using the definitions in Exchange Act Rule 3a55-1 for no less than 5 years, the primary two years in an easily accessible place. The CFMA requires that the determinations as to market capitalization and dollar value of ADTV, and thus the status of a securities index as slender-based mostly or broad-primarily based, be made, while Exchange Act Rule 17a-1 merely requires that such determinations be retained. Accordingly, to adjust to these recordkeeping requirements, a nationwide securities exchange, together with a discover-registered nationwide securities exchange, that lists or trades futures contracts on narrow-primarily based safety indexes might be required to preserve records of any calculations used to find out whether an index is slender-based mostly.158 B. Total Annual Reporting and Recordkeeping Burden 1. https://www.youtube.com/@Coin_universe -1 below the Exchange Act requires a nationwide securities exchange, together with any discover-registered nationwide securities exchange, that trades futures contracts on a slim-based safety index to carry on file for a interval of no lower than five years, the first two years in an easily accessible place, all information regarding their determinations that such indexes were slender-based. This commenter noted that a single compiler of the lists will result in consistent therapy of futures on safety indexes. The CFMA lifted the ban on the buying and selling of futures on single securities and on narrow-based mostly safety indexes and established a framework for the joint regulation of these merchandise by the CFTC and the SEC. The CFTC believes good cause exists for the foundations to develop into effective on August 21, 2001, so that eligible contract participants may start buying and selling the new merchandise as contemplated by the CFMA. The CFMA gives that principal-to-principal transactions between certain eligible contract members in safety futures products could commence on August 21, 2001, or such date that a futures association registered under Section 17 of the CEA meets the necessities in Section 15A(ok)(2) of the Exchange Act.143 The CFMA lifted the ban on, and permits the trading of, futures contracts on single securities and on narrow-based mostly safety indexes. The SEC proposed these rules on May 17, 2001. The preliminary comment period for the rules expired on June 18, 2001. The remark interval, however, was prolonged by the CFTC and the SEC until July 11, 2001. After reviewing and considering the comments obtained, the SEC is adopting the foundations, which provide the methods for markets to find out whether a safety index is slender-primarily based or broad-based mostly as required by the Exchange Act, as amended by the CFMA.
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