New Jersey officials are looking at allowing the use of equity futures contracts for equitization types of strategies, with no leverage, said Steven Kornrumpf, deputy director.
While the fund can use Treasury security futures, covered call options and currency futures, equity futures have not been allowed, he said. When investment in South Africa was not allowed at the fund, Standard & Poor's 500 contracts were considered to not be South Africa-free, he said.
The earliest a decision would come is November, he said.
Separately, trustees for the Indiana employees' fund opened the door for the use of derivatives in the fund's externally managed investment portfolios, as part of a revamp of its pension fund management guidelines.
The revamp came as a result of a change in the state's constitution to allow equity investments.
Fund policies used to be totally anti-derivatives, said Garth Dickey, executive director for the $7.5 billion fund.
The fund's new guidelines allow futures contracts to be used for equitizing cash and for management of portfolio cash flows, Mr. Dickey said.
The Indiana fund, which began investing in the stock market for the first time this year, has used futures contracts as it puts more money into the stock market every month, he said. That has helped minimize transaction costs, he said.
New offer clears some hurdles
CHICAGO - The Chicago Mercantile Exchange and the Chicago Board of Trade might have moved one step closer to merging their respective clearing operations following an overture by the CME.
The CME presented to the CBOT and the Futures Industry Association, which represents futures brokers, a detailed proposal to merge the clearing houses. CME officials believe the proposal addresses some of the sticking points encountered in previous negotiations, said spokeswoman Ellen Resnick.
The move sidesteps a joint strategic initiatives committee of the two exchanges that also is considering merging issue.
In a prepared response, CBOT Chairman Patrick H. Arbor said: "While we are still reviewing and considering many of the details of the Merc proposal, the plan overall is very much a positive step in the right direction."
An FIA statement applauded the efforts by the exchanges, adding the central issues include governance, voting rights, a guarantee fund and financial safeguards.
Limits lifted at 3 exchanges
NEW YORK - The American Stock Exchange, New York, the Chicago Board Options Exchange, Chicago, and the Pacific Exchange, San Francisco, received Securities and Exchange Commission approval to eliminate position and exercise limits on equity flexible options.