CFTC No-Action Letter 02-80: JSE Securities Exchange South Africa Futures Contract on FTSE/JSE 40 Top Companies Index

CFTC Letter 02-80
CFTC Letter No. 02-80
June 28, 2002
No Action
Office of General Counsel
Re: JSE Securities Exchange South Africa’s Request for No-Action Relief in Connection with the Offer and Sale of its Futures Contract on the FTSE/JSE 40 Top Companies Index in the United States Dear Mr. Raisler:
This is in response to letters, attachments, facsimiles and electronic mail dated from March 14, 2002 to June 14, 2002, requesting that the Office of General Counsel (“Office”) of the Commodity Futures Trading Commission (“Commission” or "CFTC") issue a “no-action” letter concerning the offer and sale in the United States (“U.S.”) of a futures contract based on the FTSE/JSE 40 Top Companies Index (“FTSE/JSE Top 40” or “Index”) traded on JSE Securities Exchange South Africa (“JSE”). We understand the facts to be as follows. JSE is a licensed, privately-owned securities and derivatives exchange located in South Africa and subject to regulation by the South African Financial Services Board (“FSB”).[1] The FSB is the regulatory authority tasked with ensuring that the JSE operates its stock and derivatives markets in the public interest and in accordance with the legislation governing the operation of stock and derivatives exchanges in South Africa. Among its powers, the FSB may disclose to any foreign financial services regulatory authority information relating to a particular financial institution or a particular individual, whether or not specified, who is or was involved in a particular financial institution or financial service if the executive officer of the FSB is of the opinion that, taking into consideration the public interest, such information will be of importance to the relevant foreign financial services regulatory authority. The FTSE/JSE Top 40 is a broad-based, modified “free float” capitalization-weighted composite index, co-owned and co-managed by FTSE International Ltd. and JSE. The FTSE/JSE Top 40 is designed to reflect the overall performance of the stocks of the largest companies traded on JSE and is composed of the stocks of 40 of the largest companies, in terms of full market value, traded on JSE. Based on data supplied by JSE, the total market capitalization of the FTSE/JSE Top 40 was approximately U.S. $117.5 billion as of December 31, 2001.[2] As of that date, no single stock in the FTSE/JSE Top 40 represented more than 21.72% of the Index. The five most heavily- weighted stocks in the FTSE/JSE Top 40 represented 53.34% of the Index. The stocks comprising the lowest 25% of the FTSE/JSE Top 40 had a six-month aggregate dollar value of average daily trading volume of approximately U.S. $90 million for the period from July 1, 2001 to December 31, 2001.[3] The Index is calculated in real time and is disseminated by electronic means through major data vendors in 15-second intervals. JSE’s futures contract on the FTSE/JSE Top 40 provides for cash settlement. The notional value for the file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/02letters/tm02-80.htm (1 of 5) [5/6/2010 5:52:43 PM]