The Commodity Futures Trading Commission published a proposal that would help end the deadlock over the launch of credit event derivatives contracts on the Chicago Mercantile Exchange and the Chicago Board Options Exchange. There will be a 14-day comment period.
The contracts proposed by the CME and the CBOE share a similar goal — protecting fixed-income investors against events such as default. However, the exchanges disagreed about whether the contracts are based on securities, which would put them under the jurisdiction of the SEC, or are derivatives on indexes, the CFTC’s realm.
Without settling this issue, the CFTC said in a statement it would allow the CBOE to trade and clear the contracts as securities “to promote economic or financial innovation and fair competition.”
