P.M. BRIEFING : CFTC Index Trade Role Upheld
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WASHINGTON — The Supreme Court today let the Commodity Futures Trading Commission regulate a new form of financial trading called index participations.
The court, without comment, left intact a ruling that gives the CFTC, rather than the Securities and Exchange Commission, such regulatory power.
Index participations are contracts of indefinite duration based on the value of a group of securities.
The SEC generally regulates securities, and the CFTC has jurisdiction over futures contracts.
The Chicago-based U.S. 7th Circuit Court of Appeals said last year that an index participation has elements of both a security and a futures contract. But the appeals court said the CFTC has exclusive jurisdiction over the investment instrument.
The appeals court ruling was challenged by the American Stock Exchange, the Chicago Board Options Exchange, the Philadelphia Stock Exchange and the Options Clearing Corp. The latter organization issues options that are traded on the exchanges.
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