As jurisdiction debate drags on, differences start to mount. (Commodity Futures Trading Commission, Securities and Exchange Commission and stock index futures)

Futures (Cedar Falls, Iowa), July, 1990 by Rosenbaum, Amy

As hearings, debates and discussions continue over whether the Securities and Exchange Commission (SEC) should take over regulation of stock-index futures from the Commodity Futures Trading Commission (CFTC), key philosophical differences between the two appear in studies on the October 1989 market drop.

The SEC report concludes "when concentrated selling (or buying) strains liquidity of the futures market, program strategies such as index arbitrage quickly transfer this activity to the stock market," resulting in larger than usual short-term demand for liquidity.

In counterpoint, the CFTCs report notes "Neither program trading nor futures sales by those with large positions explain the observed price movements on these dates."

The CFTC...

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