U.S. regulators approve trading of futures and option contracts on gold ETF
First results of SEC-CFTC memorandum of understanding
Tuesday, June 3, 2008
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The U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission announced that they've approved the trading and clearing of two novel derivative products - futures and option contracts based on shares of an exchange traded fund.
The SEC approved trading in options on the the SPDR Gold Trust shares, and the CFTC approved trading in futures on them. Option contracts on the shares will be listed on the American Stock Exchange, Chicago Board Options Exchange, International Securities Exchange, Philadelphia Stock Exchange, and the NYSE Arca Exchange. Futures contracts will trade on OneChicago, a security futures exchange. The Options Clearing Corporation will clear both types of contracts.
The regulators say their approvals will allow market forces to determine the viability of the products, and are designed to ensure that appropriate public, market participant, and financial protections are in place. Additionally, the coordinated product approvals are expected to enhance legal and regulatory certainty for users of the new products.
SEC chairman Christopher Cox said, "Today's approvals offer America's investors in gold an alternative that may, for many, be a more convenient and cost effective way to manage their risks. Today's approvals also represent a significant step forward for the SEC and the CFTC in our inter-agency cooperation. America's investors deserve a clear and united voice from government regulators on how these products will be treated under the law. Today's coordinated product approvals provide that clarity and consistency."
"The actions announced today represent a major victory for the cause of financial innovation and will help promote competition among America's financial markets," added CFTC acting chairman Walter Lukken. "With these actions, the CFTC and the SEC have begun a new era of cooperation, guided by the interagency agreement signed in March of this year. I believe that America's markets and market participants can only benefit from such close cooperation between government regulators."
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