[Federal Register Volume 64, Number 39 (Monday, March 1, 1999)]
[Proposed Rules]
[Pages 9948-9951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4953]
[[Page 9948]]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-41090, International Series Release No. 1183, File No.
S7-4-99]
RIN 3235-AH68
Exemption of the Securities of the Kingdom of Sweden under the
Securities Exchange Act of 1934 for Purposes of Trading Futures
Contracts on Those Securities
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission proposes for comment an amendment to Rule 3a12-
8 that would designate debt obligations issued by the Kingdom of Sweden
as ``exempted securities'' for the purpose of marketing and trading of
futures contracts on those securities in the United States. The
amendment is intended to permit futures trading on the sovereign debt
of Sweden.
DATES: Comments should be submitted by March 31, 1999.
ADDRESSES: All comments should be submitted in triplicate and addressed
to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450
Fifth Street, NW, Washington, DC 20549. Comments also may be submitted
electronically at the following E-mail address: rule-comments@sec.gov.
All comments should refer to File No. S7-4-99; this file number should
be included on the subject line if e-mail is used. Comment letters will
be available for public inspection and copying at the Commission's
Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549.
Electronically submitted comment letters will also be posted on the
Commission's Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Joshua Kans, Attorney, Office of
Market Supervision (``OMS''), Division of Market Regulation
(''Division''), Securities and Exchange Commission (Mail Stop 10-1),
450 Fifth Street, N.W., Washington, D.C. 20549, at 202/942-0079.
SUPPLEMENTARY INFORMATION:
I. Introduction
Under the Commodity Exchange Act (``CEA''), it is unlawful to trade
a futures contract on any individual security unless the security in
question is an exempted security (other than a municipal security)
under the Securities Act of 1933 (``Securities Act'') or the Securities
Exchange Act of 1934 (``Exchange Act''). Debt obligations of foreign
governments are not exempted securities under either of these statutes.
The Securities and Exchange Commission (``SEC'' or ``Commission''),
however, has adopted Rule 3a12-8 (17 CFR 240.3a12-8) (``Rule'') under
the Exchange Act to designate debt obligations issued by certain
foreign governments as exempted securities under the Exchange Act
solely for the purpose of marketing and trading futures contracts on
those securities in the United States. As amended, the foreign
governments currently designated in the Rule are Great Britain, Canada,
Japan, Australia, France, New Zealand, Austria, Denmark, Finland, the
Netherlands, Switzerland, Germany, the Republic of Ireland, Italy,
Spain, Mexico and, most recently, Brazil, Argentina and Venezuela (the
``Designated Foreign Governments''). As a result, futures contracts on
the debt obligations of these countries may be sold in the United
States, as long as the other terms of the Rule are satisfied.
The Commission today is soliciting comments on a proposal to amend
Rule 3a12-8 to add the debt obligations of the Kingdom of Sweden
(``Sweden'') to the list of Designated Foreign Governments whose debt
obligations are exempted by Rule 3a12-8. To qualify for the exemption,
futures contracts on the debt obligations of Sweden would have to meet
all the other existing requirements of the Rule.
II. Background
Rule 3a12-8 was adopted in 1984 \1\ pursuant to the exemptive
authority in Section 3(a)(12) of the Exchange Act in order to provide a
limited exception from the CEA's prohibition on futures overlying
individual securities.\2\ As originally adopted, the Rule provided that
the debt obligations of Great Britain and Canada would be deemed to be
exempted securities, solely for the purpose of permitting the offer,
sale, and confirmation of ``qualifying foreign futures contracts'' on
such securities. The securities in question were not eligible for the
exemption if they were registered under the Securities Act or were the
subject of any American depositary receipt so registered. A futures
contract on the covered debt obligation under the Rule is deemed to be
a ``qualifying foreign futures contract'' if the contract is
deliverable outside the United States and is traded on a board of
trade.\3\
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\1\ See Securities Exchange Act Release No. 20708 (``Original
Adopting Release'') (March 2, 1984), 49 FR 8595 (March 8, 1984);
Securities Exchange Act Release No. 19811 (``Original Porposing
Release'') (May 25, 1983), 48 FR 24725 (June 2, 1983).
\2\ In approving the Futures Trading Act of 1982, Congress
expressed its understanding that neither the SEC nor the Commodity
Futures Trading Commission (``CFTC'') had intended to bar the sale
of futures on debt obligations of the United Kindgom of Great
Britain and Northern Ireland to U.S. persons, and its expectation
that administrative action would be taken to allow the sale of such
futures contracts in the United States. See Original Proposing
Release, supra note 1, 48 FR at 24725 (citing 128 Cong. Rec H7492
(daily ed. September 23, 1982) (statements of Representatives
Daschle and Wirth)).
\3\ As originally adopted, the Rule required that the board of
trade be located in the country that issued the underlying
securities. This requirement was eliminated in 1987. See Securities
Exchange Act Release No. 24209 (March 12, 1987), 52 FR 8875 (March
20, 1987).
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The conditions imposed by the Rule were intended to facilitate the
trading of futures contracts on foreign government securities in the
United States while requiring offerings of foreign government
securities to comply with the federal securities laws. Accordingly, the
conditions set forth in the Rule were designed to ensure that, absent
registration, a domestic market in unregistered foreign government
securities would not develop, and that markets for futures on these
instruments would not be used to avoid the securities law registration
requirements. In particular, the Rule was intended to ensure that
futures on exempted sovereign debt did not operate as a surrogate means
of trading the unregistered debt.\4\
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\4\ The CFTC regulates the marketing and trading of foreign
futures contracts. CFTC rules provide that any person who offers or
sells a foreign futures contract to a U.S. customer must be
registered under the CEA, unless otherwise specifically exempted.
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Subsequently, the Commission amended the Rule to include the debt
securities issued by Japan, Australia, France, New Zealand, Austria,
Denmark, Finland, the Netherlands, Switzerland, Germany, Ireland,
Italy, Spain, Mexico and, most recently, Brazil, Argentina and
Venezuela.\5\
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\5\ As originally adopted, the Rule applied only to British and
Canadian government securities. See Original Adopting Release, supra
note 1. In 1986, the Rule was amended to include Japanese government
securities. See Securities Exchange Act Release No. 23423 (July 11,
1986), 51 FR 25996 (July 18, 1986). In 1987, the Rule was amended to
include debt securities issued by Australia, France and New Zealand.
See Securities Exchange Act Release No. 25072 (October 29, 1987), 52
FR 42277 (November 4, 1987. In 1988, the Rule was amended to include
debt securities issued by Austria, Denmark, Finland, the
Netherlands, Switzerland, and West Germany. See Securities Exchange
Act Release No. 26217 (October 26, 1988), 53 FR 43860 (October 31,
1988). In 1991 the Rule was again amended to (1) include debt
securities offreed by the Republic of Ireland and Italy, (2) change
the country designation of ``West Germany'' to the ``Federal
Republic of Germany,'' and (3) replace all references to the
informal names of the countries listed in the Rule with references
to their official names. See Securities Exchange Act Release No.
30166 (January 8, 1992), 57 FR 1375 (January 14, 1992). In 1994, the
Rule was amended to include debt securities issued by Spain. See
Securities Exchange Act Release No. 34908 (October 27, 1994), 59 FR
54812 (November 2, 1994). In 1995, the Rule was amended to include
the debt securities of Mexico. See Securities Exchange Act Release
No. 36530 (November 30, 1995), 60 FR 62323 (December 6, 1995). In
1996, the Rule was amended to include debt securities issued by
Brazil, Argentina, and Venezuela. See Securities Exchange Act
Release No. 36940 (March 7, 1996), 61 FR 10271 (March 13, 1996).
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[[Page 9949]]
III. Discussion
OM Stockholm AB of Sweden (``OM''), and its British affiliate OMLX,
The London Securities and Derivatives Exchange Limited (``OMLX''), have
proposed that the Commission amend 3a12-8 to include the sovereign debt
of Sweden. OM and OMLX (which will be collectively referred to as
``OM'') have stated that they are listing standardized futures
contracts on Swedish government securities for trading on their
respective markets, beginning with a futures contract on the ten-year
Swedish government bond. The applicants wish to make those futures
contracts available to U.S. investors.\6\
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\6\ See Letters from Philip McBride Johnson, counsel for OM and
OMLX, to Jonathan Katz, Secretary, Commission, dated June 11, 1998;
Memorandum provided by OM and OMLX to the Division of Market
Regulation on July 6, 1998; Letter from Philip Johnson to Michael
Walinskas, Deputy Associate Director, Division, Commission, dated
July 24, 1998; Letters from Philip Johnson to Joshua Kans, Attorney,
Division, Commission, dated August 20, September 11 and October 2,
1998; Letter from Philip Johnson to Michael Walinskas, dated
December 7, 1998 (collectively ``OM petition'').
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The Swedish National Debt Office has submitted a letter supporting
OM's application to amend the Rule.\7\ The Commission in 1988 proposed
adding Sweden to the list of countries designated under the Rule,\8\
but rejected the proposal because of opposition from the Swedish
government.\9\
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\7\ See Letter from Tomas Magnusson, Director and General
Counsel, Swedish National Debt Office, to Jonathan Katz, Secretary,
Commission, dated June 29, 1998.
\8\ See Securities Exchange Act Release No. 25998 (August 16,
1998), 53 FR 31709 (August 19, 1988).
\9\ The Embassy of Sweden submitted two letters in response to
the 1988 proposal, noting that currency controls prohibiting non-
residents from holding Swedish kronor-denominated securities would
preclude development of a market for physically settled futures on
such securities, and stating that in any case it was not in the
Swedish government's interest that such a market develop. As a
matter of international comity, the Commission chose not to add
Sweden to the Rule. See Securities Exchange Act Release No. 26217
(October 26, 1988), 53 FR 43860 (October 31, 1988).
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Under the proposed amendment, the existing conditions set forth in
the Rule (i.e., that the underlying securities not be registered in the
United States, the futures contracts require delivery outside the
United States, and the contracts be traded on a board of trade) would
continue to apply. OM has represented that the securities underlying
the futures contracts it will be listing are not registered in the
United States,\10\ that delivery will occur through book entry
registration in the Swedish Central Securities Depository, and that
both OM and OMLX are ``boards of trade'' as defined by the CEA.\11\
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\10\ A number of Swedish government debt securities denominated
in U.S. dollars have been registered under the Securities Act. The
Rule does not exempt futures contacts on those securities.
\11\ See OM petition, supra note 6.
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In the most recent determinations to amend the Rule to include
Mexico, Brazil, Argentina, and Venezuela, the Commission considered
primarily whether market evidence indicated that an active and liquid
secondary trading market exists for the sovereign debt of those
countries.\12\ Prior to the addition of those countries to the Rule,
the Commission considered principally whether the particular sovereign
debt had been rated in one of the two highest rating categories \13\ by
at least two nationally recognized statistical rating organizations
(``NRSROs'').\14\ The Commission continues to consider the existence of
a high credit rating as indirect evidence of an active and liquid
secondary trading market,\15\ as well as considering trading data as
evidence of an active and liquid secondary trading market for the
security, when determining whether to include a sovereign issuer in the
list of Designated Foreign Governments.
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\12\ See, e.g., Securities Exchange Act Release No. 36530
(November 30, 1995), 60 FR 62323 (December 6, 1995) (amending the
Rule to add Mexico because the Commission believed that as a whole,
the market for Mexican sovereign debt was sufficiently liquid and
deep for the purposes of the Rule); Securities Exchange Act Release
No. 36940 (March 7, 1996), 61 FR 10271 (March 13, 1996) (amending
the Rule to add Brazil, Argentina and Venezuela because the
Commission believed that the market for the sovereign debt of those
countries was sufficiently liquid and deep for the purposes of the
Rule).
\13\ The two highest categories used by Moody's Investor
Services (``Moody's'') for long-term debt are ``Aaa'' and ``Aa.''
The two highest categories used by Standard & Poor's (``S&P'') for
long-term debt are ``AAA'' and ``AA.''
\14\ See, e.g., Securities Exchange Act Release No. 30166
(January 6, 1992) 57 FR 1375 (January 14, 1992) (amending the Rule
to include debt securities issued by Ireland and Italy--Ireland's
long-term sovereign debt was rated Aa3 by Moody's and AA- by S&P,
and Italy's long-term sovereign debt was rated Aaa by Moody's and
AA+ by S&P); and Securities Exchange Act Release No. 34908 (October
27, 1994), 59 FR 54812 (November 2, 1994) (amending the Rule to
include Spain, which had long-term debt ratings of Aa2 from Moody's
and AA from S&P).
\15\ See, e.g., Securities Exchange Act Release No. 36213
(September 11, 1995), 60 FR 48078 (September 18, 1995) (proposal to
add Mexico to list of countries encompassed by rule); Securities
Exchange Act Release No. 24428 (May 5, 1987), 52 FR 18237 (May 14,
1987) (proposed amendment, which was not implemented, that would
have extended the rule to encompass all countries rated in one of
the two highest categories by at least two NRSROs).
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Sweden meets the credit rating standard. Moody's Investors Service
(``Moody's'') has assigned Sweden a long-term local currency credit
rating of Aa1 and a long-term foreign currency credit rating of Aa2.
Standard & Poor's (``S&P'') has assigned Sweden a long-term local
currency credit rating of AAA and a long-term foreign currency credit
rating of AA+.
The Commission also observes that market data indicates that there
exists an active and liquid trading market for Swedish issued debt
instruments. As of September 30, 1998, the total Swedish public debt
outstanding was equivalent to approximately US$179.4 billion (1409
billion Swedish kronor (``SEK'')).\16\ The largest portion of this
debt, Treasury bonds (Statsobligationslan) denominated in Swedish
kronor, amounted to approximately US$95.7 billion (SEK 752
billion).\17\ Treasury bills (Statsskuldvaxlar) denominated in Swedish
kronor amounted to approximately US$25.7 billion (SEK 202 billion).\18\
Foreign currency-denominated debt amounted to approximately US$46.9
billion (SEK 368 billion).\19\
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\16\ Data regarding the amount of outstanding debt was obtained
from ``Den Svenska Statsskulden: The Swedish Central Government
Debt,'' September 30, 1998, available from the website of the
Swedish national Debt Office (http://www.sndo.se). All U.S. dollar
equivalents set forth in this release are based on a conversion rate
of SEK 7.8565 for US$1.00 in effect as of September 30, 1998.
The last four countries added to the list--Mexico, Brazil,
Argentina and Venezuela--had lower amounts of public debt. See
Securities Exchange Act Release No. 36530 (December 6, 1995), 60 FR
62323 (December 6, 1995) (outstanding Mexican government debt
amounted to approximately US$87.5 billion face value as of March 31,
1995); Securities Exchange Act Release No. 36940 (March 7, 1996), 61
FR 10271 (March 13, 1996) (public and publicly guaranteed debt of
Brazil, Argentina and Venezuela amounted to approximately US$86
billion, US$55 billion and US$74 billion, respectively, as of
December 31, 1993).
\17\ The outstanding Treasury bonds include approximately
US$78.2 billion (SEK 614 billion) worth of benchmark bonds,
approximately US$5.5 billion (SEK 42.9 billion) worth of non-
benchmark bonds, and approximately US$11.9 billion (SEK 93.7
billion) worth of inflation linked bonds.
\18\ Other types of Swedish currency-denominated debt included
approximately US$6.9 billion (SEK 54.8 billion) worth of lottery
bonds. A total of US$132.5 billion (SEK 1041 billion) in Swedish
government debt was denominated in Swedish kronor.
\19\ Foreign-currency denominated debt includes approximately
US$36.4 billion (SEK 285.7 billion) worth of public issues, US$7.9
billion (SEK 62.1 billion) worth of private placements, and US$3.8
billion (SEK 30.1 billion) worth of commercial paper.
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[[Page 9950]]
OM has submitted data indicating that secondary market trading in
Treasury bonds amounted to approximately US$1.156 trillion (SEK 9079
billion) in 1996, approximately US$1.343 trillion (SEK 10,550 billion)
in 1997, and approximately US$593 billion (SEK 4662 billion) in the
first six months of 1998.\20\ The average daily trading volume during
that period ranged from approximately US$2.72 billion (SEK 21.4
billion) for the month of July 1996 to approximately US$8.35 billion
(SEK 65.6 billion) for the month of October 1997.\21\ OM adds that in
1997, there were 109,128 transactions in benchmark Treasury bonds,
27,525 transactions in non-benchmark Treasury bonds, and 1999
transactions in inflation-linked Treasury bonds.\22\
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\20\ OM petition, supra note 6. OM states that the statistics
about secondary market trading in Swedish debt were derived from
data specially prepared by the Swedish Central Securities
Depository. Id.
\21\ OM has submitted data stating that the average daily
trading volume for Treasury bonds decreased to approximately US$2.11
billion (SEK 16.6 billion) for the month of July 1998.
\22\ OM states that secondary market trading for Swedish
government debt is primarily conducted on a phone-based and screen-
based over-the-counter market conducted by a number of dealers, with
transactions in Treasury bonds and Treasury bills registered at the
PMX Exchange at the end of the trading day. OM petition, supra note
6.
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OM has also submitted data stating that secondary market trading in
Treasury bills amounted to approximately US$439.4 billion (SEK 3452
billion) in 1996, approximately US$487.6 billion (SEK 3831 billion) in
1997, and approximately US$209.3 billion (SEK 1645 billion) in the
first six months of 1998. The average daily trading volume during that
period ranged from approximately US$1.18 billion (SEK 9.3 billion) for
the month of May 1996 to approximately US$2.64 billion (SEK 20.7
billion) for the month of March 1997. OM adds that in 1997, there were
38,634 transactions in Treasury bills.\23\
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\23\ OM states that secondary market trading in lottery bonds
was equivalent to approximately US$512 million (SEK 4.03 billion) in
1996, US$449 million (SEK 3.53 billion) in 1997, and US$213 million
(SEK 1.67 billion) in the first half of 1998. OM has not provided
secondary market trading data for other Swedish debt securities.
According to OM, transaction data for Swedish government debt
denominated in foreign currencies is extremely difficult to obtain.
OM further contends that because a number of Swedish government debt
securities denominated in U.S. dollars have been registered under
the Securities Act of 1933, and therefore are not eligible for
exemption under the Rule, secondary market data for securities
denominated in non-kronor currencies is less significant. See id.
OM states that it presently does not intend to list any futures
on inflation-linked bonds, treasury bonds with repurchase
agreements, lottery bonds or commercial papers. Id.
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In light of the above data, the Commission preliminarily believes
that the debt obligations of Sweden should be subject to the same
regulatory treatment under the Rule as the debt obligations of the
Designated Foreign Governments.
IV. General Request for Comments
The Commission seeks comments on the desirability of designating
the debt securities of Sweden as exempted securities under Rule 3a12-8.
Comments should address whether the trading or other characteristics of
Sweden's sovereign debt warrant an exemption for purposes of futures
trading. Commentators may wish to discuss whether there are any legal
or policy reasons for distinguishing between Sweden and the Designated
Foreign Governments for purposes of the Rule. The Commission also
requests information regarding the potential impact of the proposed
rule on the economy on an annual basis. If possible, commenters should
provide empirical data to support their views. The Commission also
seeks comments on the general application and operation of the Rule
given the increased globalization of the securities markets since the
Rule was adopted.
V. Costs and Benefits of the Proposed Amendments
The Commission has considered the costs and benefits of the
proposed amendment to the Rule, and the Commission preliminarily
believes that the proposed amendment offers potential benefits for U.S.
investors, with no direct costs. If adopted, the proposed amendment
would allow U.S. and foreign boards of trade to offer in the United
States, and U.S. investors to trade, a greater range of futures
contracts on foreign government debt obligations. Moreover, the trading
of futures on the sovereign debt of Sweden should provide U.S.
investors with a vehicle for hedging the risks involved in the trading
of the underlying sovereign debt of Sweden. The Commission does not
anticipate that the proposed amendment would result in any direct cost
for U.S. investors or others because the proposed amendment would
impose no recordkeeping or compliance burdens, and merely would provide
a limited purpose exemption under the federal securities laws. The
restrictions imposed under the proposed amendment are identical to the
restrictions currently imposed under the terms of the Rule and are
designed to protect U.S. investors.
The Commission requests comments on the costs and benefits of the
proposed amendment to Rule 3a12-8. In particular, the Commission
requests commentators to address whether the proposed amendment would
generate the anticipated benefits, or impose any costs on U.S.
investors or others.
VI. Effect of the Proposed Amendment on Competition, Efficiency and
Capital Formation
Section 23(a)(2) of the Exchange Act \24\ requires the Commission,
in adopting rules under the Exchange Act, to consider the competitive
effect of such rules, if any, and to refrain from adopting a rule that
would impose a burden on competition not necessary or appropriate in
furthering the purposes of the Exchange Act. Moreover, Section 3 of the
Exchange Act \25\ as amended by the National Securities Markets
Improvement Act of 1996 \26\ provides that whenever the Commission is
engaged in a rulemaking and is required to consider or determine
whether an action is necessary or appropriate in the public interest,
the Commission shall consider, in addition to the protection of
investors, whether the action will promote efficiency, competition and
capital formation.
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\24\ 15 U.S.C. 78w(a)(2).
\25\ 15 U.S.C. 78c.
\26\ Pub. L. No. 104-290, 110 Stat. 3416 (1996).
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In light of the standards cited in Sections 3 and 23(a)(2) of the
Exchange Act, the Commission preliminarily believes that the proposed
amendment to the Rule will promote efficiency, competition and capital
formation. The proposal is intended to expand the range of financial
products available in the United States, and will make available to
U.S. investors an additional product to use to hedge the risks
associated with the trading of the underlying sovereign debt of Sweden.
Insofar as the proposed amendment contains limitations, they are
designed to promote the purposes of the Exchange Act by ensuring that
futures trading on government securities of Sweden is consistent with
the goals and purposes of the federal securities laws by minimizing the
impact of the Rule on securities trading and distribution in the United
States.
The Commission requests comments as to whether the amendment to the
Rule will have any anti-competitive effects.
VII. Administrative Requirements
Pursuant to section 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b), the Chairman of the Commission has certified that the
amendment proposed herein would not, if adopted,
[[Page 9951]]
have a significant economic impact on a substantial number of small
entities. This certification, including the reasons therefor, is
attached to this release as Appendix A. We encourage written comments
on the Certification. Commentators are asked to describe the nature of
any impact on small entities and provide empirical data to support the
extent of the impact.
The Paperwork Reduction Act does not apply because the proposed
amendment does not impose recordkeeping or information collection
requirements, or other collections of information which require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
VIII. Statutory Basis
The amendment to Rule 3a12-8 is being proposed pursuant to 15
U.S.C. 78a et seq., particularly sections 3(a)(12) and 23(a), 15 U.S.C.
78c(a)(12) and 78w(a).
List of Subjects in 17 CFR Part 240
Reporting and recordkeeping requirements, Securities.
Text of the Proposed Amendment
For the reasons set forth in the preamble, the Commission is
proposing to amend Part 240 of Chapter II, Title 17 of the Code of
Federal Regulations as follows:
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
1. The authority citation for Part 240 continues to read in part as
follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,
78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),
78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and
80b-11, unless otherwise noted.
* * * * *
2. Section 240.3a12-8 is amended by removing the word ``or'' at the
end of paragraph (a)(1)(xviii), removing the ``period'' at the end of
paragraph (a)(1)(xix) and adding ``; or'' in its place, and adding
paragraph (a)(1)(xx), to read as follows:
Sec. 240.3a12-8 Exemption for designated foreign government securities
for purposes of futures trading.
(a) * * *
(1) * * *
(xx) The Kingdom of Sweden.
* * * * *
By the Commission.
Dated: February 23, 1999.
Margaret H. McFarland,
Deputy Secretary.
Note: Appendix A to the Preamble will not appear in the Code of
Federal Regulations.
Appendix A--Regulatory Flexibility Act Certification
I, Arthur Levitt, Jr., Chairman of the Securities and Exchange
Commission, hereby certify, pursuant to 5 U.S.C. Sec. 605(b), that
the proposed amendment to Rule 3a12-8 (``Rule'') under the
Securities Exchange Act of 1934 (``Exchange Act''), which would
define the government debt securities of the Kingdom of Sweden
(``Sweden'') as exempted securities under the Exchange Act for the
purpose of trading futures on such securities, will not have a
significant economic impact on a substantial number of small
entities for the following reasons. First, the proposed amendment
imposes no record-keeping or compliance burden in itself and merely
allows, in effect, the marketing and trading in the United States of
futures contracts overlying the government debt securities of
Sweden. Second, because futures contracts on the nineteen countries
whose debt obligations are designated as ``exempted securities''
under the Rule, which already can be traded and marketed in the
U.S., still will be eligible for trading under the proposed
amendment, the proposal will not affect any entity currently engaged
in trading such futures contracts. Third, because those primarily
interested in trading such futures contracts are large,
institutional investors, neither the availability nor the
unavailability of these futures products will have a significant
economic impact on a substantial number of small entities, as that
term is defined for broker-dealers in 17 CFR 240.0-10.
Arthur Levitt, Jr.
Chairman.
Dated: February 23, 1999.
[FR Doc. 99-4953 Filed 2-26-99; 8:45 am]
BILLING CODE 8010-01-P
