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American Stock Exchange 

Boston Stock Exchange 

COMMENT 

Chicago Board Options Exchange 

International Securities Exchange 

VIA ELECTRONIC MAIL 

July 8, 2008 

David A. Stawick 

Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

Received CFTC 

NYSEArca 

~~ The Options Clearing Corporation 

Philadephia Stock Exchange ~:; (') 

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Re: Concept Release on the Appropriate Regulatory Treatment of Event 

Contracts. 

Dear Mr. Stawick: 

The American Stock Exchange, the Boston Options Exchange, the Chicago Board 

Options Exchange, the International Securities Exchange, NYSE Area, The Options 

Clearing Corporation, and the Philadelphia Stock Exchange, appreciate the opportunity 

to comment on Comment File 08-004, Concept Release on the Appropriate Regulatory 

Treatment of Event Contracts. 1 In this release, the Commodity Futures Trading 

Commission (the Commission) is soliciting comment on the appropriate regulatory 

treatment of financial agreements offered by markets commonly referred to as event, 

prediction, or information markets (event contracts). We commend the Commission for 

trying to stay ahead of market developments by seeking comment on the appropriate 

regulatory response to event contracts. Among other things, the release raises 

jurisdictional issues associated with event contracts. These jurisdictional issues are the 

focus of our comment letter. 

The Commission's goal in devising a regulatory response to event contracts should be 

to provide legal certainty for these instruments, to address customer protection issues 

raised by these instruments, and to insure a level playing field between event contracts 

and similar instruments traded on fully-regulated securities and futures exchanges. As 

the Commission notes in its release, the interests underlying event contracts cover an 

extremely diverse range of measures and occurrences. This wide variety of underlying 

interests for event contracts causes us concern because there are types of event 

contracts that would fall under the jurisdiction of the Securities and Exchange 

Commission ("SEC").2 We urge the Commission to work with the SEC through the 

1 73 FR 25669 (May 7, 2008). 

http://www.cftc.gov/stellenUgroups/public/@lrfederalregister/documents/file/e8-9981 a.pdf). 2 The definition of a "security" under the federal securities laws includes, but is not limited to, options "on" 

a security, "including any interest therein or based on the value thereof." See Section 2(a)(1) of the 

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process outlined in the Memorandum of Understanding (MOU) on areas of common 

regulatory interest signed March 11, 2008 prior to taking any action to establish a 

regulatory framework for event contracts so that there is no regulatory or legal 

uncertainty as to event contracts that are securities and properly within the exclusive 

jurisdiction of the SEC. 3 Article 111-11 of the MOU states issues for consultation and 

coordination that include, but are not limited to, material events that may significantly 

impact an entity or market regulated by the other Party, proposals to list or trade novel 

derivative products, and other material changes to areas of common regulatory 

interest.4 

It is important to insure that any regulatory framework developed for event contracts 

reflects the views of the SEC and includes a method for addressing the cross-agency 

issues posed by event contracts that may be securities. Such regulatory foresight for 

event contracts will help to avoid the delays that occurred with proposals by securities 

exchanges to trade other products. 5 Indeed, the MOU was recently used to address the 

regulatory issues posed by options on an exchange traded fund that invests in gold.6 

As a result, we encourage the Commission to continue collaborating with the SEC 

through the MOU process on the appropriate regulatory treatment of event contracts. 

We applaud the Commission's leadership in addressing this complex issue, and we 

thank you for the opportunity to comment on the concept release on the appropriate 

regulatory treatment of event contracts. If you would like to discuss the issue raised in 

this letter, please contact Susan Milligan at 202-756-1972. 

Sincerely, 

American Stock Exchange 

Boston Options Exchange 

Chicago Board Options Exchange 

International Securities Exchange 

NYSEArca 

The Options Clearing Corporation 

Philadelphia Stock Exchange 

Securities Act of 1933 and Section 3(a)(10) of the Securities Exchange Act of 1934; see also SEC 

Release No. 34-55871 (June 6, 2007), 72 FR 32372 (June 12, 1007) (order approving SR-CBOE-2006-

84 containing an express finding that credit options are options based on the value of a security or 

securities). 

3 Memorandum of Understanding Between the U.S. Securities and Exchange Commission and the U.S. 

Commodity Futures Trading Commission Regarding Coordination in Areas of Common Regulatory 

Interest, Walter L. Lukken, Acting Chairman, CFTC, Christopher Cox, Chairman, SEC (March 11, 2008) 

ihttp://www.cftc.gov/stellent/groups/public/@newsroom/documents/file/cftc-sec-mou030608.pdf). 

ld at page 3. 

5 Introduction of credit derivative products and options on the SPDR Gold Trust (GLD) were significantly 

delayed due to a jurisdiction review by both the SEC and CFTC. 6 See SEC Release No. 34-57894 (May 30, 2008), 73 FR 32061 (June 5, 2008) (order approving the 

listing and trading of GLD options).