May 11, 1993
TO: INVESTMENT ADVISERS COMMITTEE NO. 11-93
SEC RULES COMMITTEE NO. 46-93
DERIVATIVE INSTRUMENTS SUBCOMMITTEE
RE: CFTC PROPOSES RULE AMENDMENTS TO PERMIT BUNCHED ORDERS
__________________________________________________________
The Commodity Futures Trading Commission is soliciting
comments on a proposal to permit bunching of futures or futures
options orders under certain circumstances. The proposal is
intended to facilitate institutional participation in the futures
markets. A copy of the proposing release is attached.
Specifically, under proposed Regulation 1.35(a-1)(5),
multiple customer orders could be bunched for execution without
individual customer account identifiers, provided that the person
placing the order had investment discretion with respect to the
accounts and submitted to the futures commission merchant
("FCM"), at the time of entering an order, a single series
designation identifying all the accounts to be included in the
bunched order and a predetermined order allocation formula.
In addition, proposed Regulation 1.35(a-1)(6) would allow
futures exchanges to submit for CFTC approval proposed rules
permitting end-of-day allocation of bunched orders that are
entered by "eligible account managers" on behalf of certain
institutional customers as part of a bona fide intermarket
trading strategy also involving securities. According to the
proposing release, the purpose of such rules would be to provide
equivalent treatment of customers' accounts traded pursuant to
strategies involving activity in both the futures markets and the
securities markets (where post-trade allocation already is
permitted). Under the proposal, the term "eligible account
manager" would include, among others, an investment adviser
registered as such under the Investment Advisers Act of 1940, and
eligible customers would include registered investment companies
and certain other specified institutions.
Comments on the proposal must be filed with the CFTC by
June 17. If there are any issues you would like the Institute to
consider including in a comment letter to the CFTC, please
contact me at 202/955-3514 (or by fax at 202/659-1519) by
Thursday, June 3.
Frances M. Stadler
Assistant Counsel
Attachment