CFTC to Update Rule on Security Futures Products

The CFTC today announced plans to update an outdated rule on securities futures products that will affect exchanges listing SFPs. The proposal will increase the default level of equity SFP position limits to 25,000 (100-share) contracts, up from 13,500 (100-share) contracts, and modify the criteria for setting a higher level of position limits and position accountability levels.

The CFTC’s existing regulation — which was issued in 2001 and has not been updated since — has not kept pace with position limits on security options, which are regulated by the Securities and Exchange Commission. CFTC noted that the proposal is intended to facilitate risk management for entities using SFPs and could provide greater liquidity in SFP trading. Comments are due 60 days after the proposal is published in the Federal Register.