§8306 Determining Status of Novel Derivative Products

Summary

When someone files to list or trade a new kind of derivative that might be both a security and a futures contract (or an option on one), they may give a copy of that filing to both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) at the same time and say they did so. If the filer does not notify both agencies, the agency that finds the filing may involve the other agency and must send it a copy within 5 business days. Either agency has 21 days after getting notice (or can act on its own if no notice was sent) to ask the other agency, in writing, to decide whether the product is a security or a futures/option product. Either agency can also ask the other for an exemption under the law, and any request can be withdrawn in writing before a decision is made. The agency asked to decide must issue a written order with reasons no later than 120 days after it gets the request, unless the request was withdrawn. If the request is for an exemption, the agency must either grant it or explain why it won’t. The losing agency may ask the U.S. Court of Appeals for the D.C. Circuit to review the order within 60 days. The court must move the case quickly. A copy of the appeal must be sent to the other agency within 1 business day, and that agency must file the order and related documents. The court gives no special weight to either agency’s view. Filing the appeal pauses the order until the court’s decision is final.