U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-5120 

Facsimile: (202) 418-5524

www.cftc.gov

Office of General Counsel

 

CFTC letter No. 07-07 

May 24, 2007 

No-Action 

Office of General Counsel 

Ms. Adeline Ee 

Vice President 

Members & Institutions Business, Markets Group 

Singapore Exchange, Ltd. 

2 Shenton Way, #19-00, SGX Centre 1 

Singapore 068804 

 Re: Request for No-action Relief to Offer and Sell in the United States Singapore 

 Exchange Derivatives Trading Limited’s U.S. Dollar Denominated Nikkei 225 

 Index Futures Contract 

Dear Ms. Ee: 

 This is in response to your letter dated December 20, 2006, requesting on behalf of 

Singapore Exchange Derivatives Trading Limited (“SGX-DT”) that the Office of General 

Counsel (“Office”) of the U.S. Commodity Futures Trading Commission (“CFTC” or 

“Commission”) issue a no-action letter concerning the offer and sale in the United States 

(“U.S.”) of SGX-DT’s U.S. dollar denominated futures contract based on the Nikkei 225 Index 

(“Nikkei 225” or “Index”). 

 We understand that on November 24, 2006, SGX-DT added to its current suite of Nikkei 

contracts a cash settled U.S. dollar denominated version of the Nikkei 225 futures contract. The 

U.S. dollar denominated version is targeted at investors who prefer a U.S. dollar exposure to the 

Japanese market. A similar U.S. dollar denominated futures contract is listed and traded on the 

Chicago Mercantile Exchange (“CME”). SGX-DT intends to make its U.S. dollar denominated 

contract available on the Mutual Offset Facility with the CME. 

 In 1986, this Office issued no-action relief to permit the offer and sale in the U.S. of 

SGX-DT’s Japanese yen denominated futures contract based on the Nikkei 225.1

 The terms and 

conditions of the U.S. dollar denominated version that is the subject of this request are 

substantially identical to the Japanese yen denominated version that received no-action relief, 

except that the subject contract is denominated in U.S. dollars. Specifically, the contract 

1 See CFTC Staff Letter No. 86-6, [1986-1987 Transfer Binder] Comm. Fut. L. Rep. (CCH) 

¶ 23,395 (Dec. 5, 1986). 
multiplier of the subject contract is U.S. $5.00 as opposed to 500 Japanese yen for the yendenominated contract. 2

 The Nikkei 225 is a broad-based, price-weighted composite security index made up of 225 

highly capitalized and actively traded stocks in the first section of the Tokyo Stock Exchange. The 

Index is a widely observed index of stock market activity in Japan. Last year, this Office examined 

the Nikkei 225 and concluded that the Nikkei 225 was not a narrow-based security index, as defined 

in Section 1a(25)(A) of the Commodity Exchange Act (“Act”).3 This Office also concluded in 

applying the criteria set forth in Section 2(a)(1)(C)(ii) of the Act, that the Index was not readily 

susceptible to manipulation, nor to being used to manipulate any underlying security.4 Moreover, in 

the 1986 no-action letter, this Office determined that SGX-DT’s Japanese yen denominated futures 

contract on the Nikkei 225 is not readily susceptible to manipulation. We do not believe that the 

contract multiplier in U.S. dollars included in the contract specifications for SGX-DT’s U.S. dollar 

denominated Nikkei 225 futures contract would render the contract or the Index readily susceptible 

to manipulation within the meaning of the Act.5

 In light of the foregoing, this Office will not recommend enforcement action to the 

Commission based on Sections 2(a)(1)(C)(iv), 4(a), or 12(e) of the Act, as amended, if SGXDT’s U.S. dollar denominated Nikkei 225 futures contract is offered or sold in the U.S. Because 

this position is based upon facts and representations contained in your letter, it should be noted 

that any different, omitted or changed facts or conditions might require a different conclusion. 

This position also is contingent on the continued compliance by SGX-DT with all regulatory 

requirements imposed by SGX-DT’s regulator, the Monetary Authority of Singapore, and the 

applicable laws and regulations of Singapore. In addition, this position may be affected by any 

rules that the Commission may adopt regarding futures contracts based on non-narrow-based 

security indices. 

 

2 See letter from Adeline Ee, Vice President, SGX-DT, to Patrick J. McCarty, General Counsel, 

CFTC, dated December 20, 2006, at 2. 

3 See CFTC Staff Letter No. 06-14, [Current Transfer Binder] Comm. Fut. L. Rep. (CCH) 

¶ 30,267 (July 10, 2006). 

4 Id.

5

 SGX-DT represents that it will cooperate with the Commission in any inquiry, investigation 

and/or enforcement proceeding relating to the offer and sale of SGX-DT’s U.S. dollar 

denominated Nikkei 225 futures contract in the U.S. See letter from Ms. Ee to Mr. McCarty, at 

2. 

2
 The offer and sale in the U.S. of SGX-DT’s U.S. dollar denominated futures contract on 

the Nikkei 225 is, of course, subject to Part 30 of the Commission’s regulations, which governs 

the offer and sale of foreign futures and foreign option contracts in the U.S.6

 Sincerely, 

 Terry S. Arbit 

 Acting General Counsel 

 

6 See 17 C.F.R. Part 30. 

3