Speaker
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Speaker:
We live in a world of global competition. Last week, one of our foreign competitors--the London International Financial Futures and Options Exchange--issued the attached announcement of its intention to begin trading futures contracts on U.S. stocks, just four months from now. We have wanted to offer that product ourselves for decades. But U.S. law prohibits us from doing so.
Fortunately, legislation is pending in the House and Senate to lift the ban on single stock futures. H.R. 4541 would amend the so-called Shad-Johnson Accord to allow trading in the U.S. in single stock futures, while also providing legal certainty for OTC derivatives and regulatory relief for U.S. futures exchanges. Each of three House committees has authored different versions of that bill, but each version would end the single stock futures ban. And now, the SEC and CFTC finally have reached agreement on a compromise approach to regulating single stock futures that addresses all legitimate regulatory objectives.
We know that some oppose this legislation because they want to put off indefinitely the day when they will be faced with competition on this front. The LIFFE announcement last week proves that approach will simply benefit our foreign competitors at the expense of our national economic interest. We have no time for gamesmanship or protectionism. Recognizing that reality, we have repeatedly responded constructively to resolve domestic competitive issues. Most recently, we have offered to have single stock futures taxed the same way as stock options. To that end, we believe that legislation to tax single stock futures like stock options should be enacted this year, ending any debate about tax parity.
We need the House to consider and pass H.R 4541 now. It is vital to the competitive viability of the U.S. futures exchanges.
Sincerely,
David Brennan, Chicago Board of Trade and Scott Gordon, Chairman, Chicago Mercantile Exchange
Dennis Dutterer, Interim President and CEO, Chicago Board of Trade; Jim McNulty, President and CEO, Chicago Mercantile Exchange
cc: The Honorable Dick Armey, Majority Leader
The Honorable Richard Gephardt, Minority Leader
The Honorable Tom DeLay, Majority Whip
The Honorable David Bonior, Minority Whip
House Agriculture Committee
House Banking and Financial Services Committee
House Commerce Committee
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House Ways and Means Committee
The California Delegation
The Illinois Delegation
The Massachusetts Delegation
The New York Delegation
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