The U.S. Securities and Exchange Commission has proposed amending Rule 3a12-8 to add European Union debt obligations to the list of foreign government securities exempted for futures marketing and trading. The proposal would extend an exemption currently applied to debt issued by EU member states to debt issued directly by the European Union itself.
Under the proposed change, the exemption would apply only to futures marketing and trading, while federal securities laws would continue to govern the underlying European Union debt securities.
Addressing Regulatory Gaps
SEC Chairman Paul S. Atkins said the current framework covers debt issued by several EU member states but does not include debt issued directly by the European Union. "For too long, gaps like this one where the debt of several EU member states was covered but debt of the European Union itself was not have created exactly the kind of inconsistency that breeds confusion rather than confidence in the markets," Atkins said.
CFTC Oversight of EU Debt Futures
Under the proposal, the Commodity Futures Trading Commission would oversee futures contracts tied to European Union debt obligations. This change would align EU debt futures with the treatment already given to other foreign government debt futures under Rule 3a12-8.
The SEC does not plan to change other substantive requirements of Rule 3a12-8, and existing provisions for other foreign government debt obligations would remain in place.
Atkins noted that "this proposal is harmonization in practice and builds on our efforts with the CFTC to preserve investor protection while closing regulatory gaps."
Public Comment Period
The SEC plans to publish the Rule 3a12-8 proposal in the Federal Register. The public comment period will remain open for 60 days after publication.
