# Proposed Amendments to the NYFE NYSE Composite Index Futures and Futures Option Contracts > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-17881 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** July 22, 1994 ## Text COMMODITY FUTURES TRADING COMMISSION Proposed Amendments to the NYFE NYSE Composite Index Futures and Futures Option Contracts AGENCY: Commodity Futures Trading Commission. ACTION: Notice of Proposed Contract Market Rule Changes. ----------------------------------------------------------------------- SUMMARY: The New York Futures Exchange (NYFE) has submitted proposed rule amendments to its NYSE Composite Index (Index) futures contract to base the final settlement price on the closing level of the Index on the third Friday of the contract month, rather than on the special opening quotation on the third Friday, and change the last day of trading in the Index futures and futures option contracts to the third Friday of the contract month from the day preceding the third Friday. In accordance with Section 5a(a)(12) of the Commodity Exchange Act, the Commission has determined that publication of the proposal is in the public interest and will assist the Commission in considering the views of interested persons. DATES: Comments must be received on or before August 22, 1994. ADDRESSES: Interested persons should submit their views and comments to Jean A. Webb, Secretary, Commodity Futures Trading Commission, 2033 K Street NW., Washington, DC 20581. Reference should be made to the amendments to the NYFE NYSE Composite Index futures contract. FOR FURTHER INFORMATION CONTACT: Contact Stephen Sherrod, Division of Economic Analysis, Commodity Futures Trading Commission, 2033 K Street NW., Washington, DC 20581, telephone 202-254-7303. SUPPLEMENTARY INFORMATION: In April 1987, the Commission approved rule amendments to the NYFE's NYSE Composite Index futures contract providing that the final settlement price of the futures contract would be based on the special opening quotation of the Index, rather than on the closing level of the Index, on the third Friday of the contract month. These amendments first went into effect for the June 1987 contract month.1 --------------------------------------------------------------------------- \1\Under the implementation plan, during the transition period from June 1987 through March 1988 the NYFE listed concurrently in each contract month two NYSE Composite Index futures contracts. The final settlement price for one contract was based on the closing level of the Index while the final settlement price for the other contract was based on the special opening quotation of the Index. --------------------------------------------------------------------------- The effect of the proposed amendments would be that the final settlement price determination and last trading day provisions would be identical to the previous rules of the subject contracts, as noted above. Current rules would continue to apply to contracts expiring prior to June P1995.2 --------------------------------------------------------------------------- \2\The NYFE informed its members of the proposed amendments prior to listing the June 1995 contract month. --------------------------------------------------------------------------- In its submission, the NYFE noted that the use of the special opening quotation as a basis of cash settlement has caused confusion among public customers. The level of the Index is disseminated based on the last transaction price of each of the over 2,400 component stocks. However, the special opening quotation is calculated based on the opening price of each component stock. Such opening stock prices typically are not determined contemporaneously. Thus, the level of the special opening quotation may vary from the range of the cash Index level on the expiration Friday. The NYFE noted such variations have resulted in numerous complaints from public customers. The Commission notes that the final settlement prices for certain other broad-based stock index futures contracts also are based on the closing levels of the relevant indices.3 Further, the final settlement prices for certain broad-based stock index option contracts traded on national securities exchanges also are based on the closing levels of the relevant indices.4 --------------------------------------------------------------------------- \3\For example, the final settlement prices of the Value Line Average Stock Index futures contract of the Kansas City Board of Trade and the Major Market Index futures contract of the Chicago Mercantile Exchange are based on the closing level of those indices. \4\For example, options on the Major Market Index of the American Stock Exchange settle to the closing level of that index. --------------------------------------------------------------------------- In support of its proposed change, the NYFE noted its belief that the proposed amendments would have no detrimental impact on the underlying market. According to NYFE staff, there is not significant futures trading volume associated with direct arbitrage between the subject futures contract and the equities comprising the Index. The Commission is requesting comment on the proposed amendments, considering the appropriateness of the revised procedures relative to the requirements of Commission Guideline No. 1. for cash settled futures contracts. Also, the Commission requests comment as to whether there are any issues, in addition to the relative extent of cash/ futures arbitrage in this Index, that should be considered by the Commission in its review of the proposal. Copies of the proposed amendments will be available for inspection at the Office of the Secretariat, Commodity Futures Trading Commission, 2033 K Street, NW., Washington, DC 20581. Copies of the proposed rule amendments can be obtained through the Office of the Secretariat by mail at the above address or by phone at (202) 254-6314. The materials submitted by the NYFE in support of the proposed amendments may be available upon request pursuant to the Freedom of Information Act (5 U.S.C. 552) and the Commission's regulations thereunder (17 CFR Part 145 (1987)). Requests for copies should be made to the FOI, Privacy and Sunshine Act Compliance Staff of the Office of the Secretariat at the Commission's headquarters in accordance with 17 CFR 145.7 and 145.8. Any person interested in submitting written data, views, or arguments on the proposed amendments should send such comments to Jean A. Webb, Secretary, Commodity Futures Trading Commission, 2033 K Street, NW., Washington, DC 20581 by the specified date. Issued in Washington, DC, on July 19, 1994. Jean A. Webb, Secretary of the Commission. [FR Doc. 94-17881 Filed 7-21-94; 8:45 am] BILLING CODE 6351-01-P --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-17881. Public record. Not legal advice.