Before You Invest Your Money

A controversial financial regulatory reform proposal that would have extended the oversight of the Commodity Futures Trading Commission over some equity options contracts has been withdrawn after lobbying by the US options industry.Blanche Lincoln, head of the Senate agriculture committee, proposed this month that options contracts based on broad market gauges should be treated as swaps, a class of derivatives that can only be traded on futures exchanges.The proposal would have prevented options exchanges from trading contracts such as options on the Standard & Poor’s 500 Index. These contracts have been considered securities by regulators since they were launched in the early 1980s and therefore come under the jurisdiction of the Securities and Exchange Commission rather than the CFTC, the US futures watchdog.But, lobbying by the options industry successfully removed the Lincoln proposal from the financial regulatory reform bill which the Senate started to debate on Thursday, according to people familiar with the matter.Mary Schapiro (Above), SEC chairman, also came out strongly against the Lincoln plot this week, calling it “a step backward” that would “unnecessarily complicate matters by making an arbitrary line based on the number of securities in a swap”.Continue to full article.Synopsis: A proposal from Blanche Lincoln that would have went certain options contracts from the jurisdiction of the SEC to the oversight of the CFTC has been successfully lobbied out of the financial regulatory reform bill.