There is joint jurisdictional regulation of US clients trading on foreign indices between the SEC and the CFTC. They have produced certain restrictions regarding the concentration of any one underlying security in an index, and the extent to which a US-based FCM client can participate.

They define and restrict “narrow indices” as ones where:

  • A constituent individually makes up more than 30% by market value.
  • 9 or fewer constituents
  • Top 5 constituents make up more than 60% by market value.

Bottom 25% of component market value greater than 30 million dollars or 50 million dollars (Depending on constituent count)

In late 2020, in the wake of a major index flipping from Broad to Narrow and thus having client trading implications, a group of industry participants (FCMs, law firms, clients) came together to ask FIA Tech to help facilitate the standardization of the classification.

FIA Tech continues to work with firms of all types to:

  • Understand the regulation, calculations & requirements.
  • Conduct regular working group calls (along with FIA’s Law & Compliance Division)
  • Work with global exchanges to ensure regular, transparent data that can be used by global financial participants
  • Produce a regular analysis that can be relied on by FCMs and their clients

For more information or to participate please contact

2009 SEC Order: Order under Section 36 of the Securities Exchange Act of 1934 Granting an Exemption from Exchange Act Section 6(h)(1) for Certain Persons Effecting Transactions in Foreign Security Futures and under Exchange Act Section 15(a)(2) and Section 36 Granting Exemptions from Exchange Act Section 15(a)(1) and Certain Other Requirements

CFTC Order: Security Futures Product

See our Foreign Security Futures Offering on Databank

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