Court Opinion

ID: 8915140
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:41:50.420369+00
Date Added: 2024-06-11T17:08:54.547989
License: Public Domain

CUDAHY, Circuit
Judge, dissenting.
I commend Chief Judge Cummings for putting to such exemplary use his abundant resources of scholarship and analysis on behalf of what might be in theory a rational and symmetrical outcome of this jurisdictional muddle. But I regret that his opinion for the majority fails at almost every turn to meet the tests of plain language, congressional intent, historical context and practical result. The opinion throws into disarray the agreement just reached between the CFTC and the SEC which would allow GNMA options trading to go forward forthwith on the CBOE. By reaching the extreme conclusion that the Securities Exchange Commission is without power under its own statutes to regulate options trading in what is incontestably a “security”— GNMA’s — , the majority seems to have returned all parties to “square one” in this unseemly regulatory debacle.
I.
In the first place, had Congress wished to confer exclusive jurisdiction over options on actual commodities (in contrast to options *1169on futures contracts) on the CFTC, it could have explicitly incorporated the term “options” at an appropriate place in the exclusive jurisdiction clause (section 2(a)(1) of the CEA, 7 U.S.C. § 2). Congress did just that, for example, in referring expressly to an “option” involving any commodity as one of the species of transactions regulated by section 4c(b) of the CEA (enacted contemporaneously with the exclusive jurisdiction proviso). Instead Congress, in section 2(a)(1) of the Act, used language classically crafted to grant exclusive jurisdiction over the trading of commodity futures, including options on such futures, to the Commodity Futures Trading Commission.
The sharp distinction between Congress’ non-inclusion of options on GNMA’s and other underlying actuals1 in the exclusive jurisdiction clause and their inclusion in the contemporaneous provisions of section 4c(b) is highlighted in the 1978 Senate Report, which reviewed what Congress had done in 1974:
As to the newly-regulated commodities, section 201 of the CFTC Act amended section 2(a)(1) of the Act to grant the Commission exclusive jurisdiction over options involving commodity futures contracts. In addition, section 402 of the CFTC Act added section 4c(b) of the Act (7 U.S.C. 6c(b)). That section permits options transactions involving the newly-regulated commodities, subject to Commission rules and regulations ....
S.Rep.No.850, 95th Cong., 2d Sess. 59, reprinted in [1978] U.S.Code Cong. & Ad. News 2147 (emphasis added). If, as the majority contends, the phrase “options involving commodity futures contracts” included options on actuals as well as options on futures contracts, then the “[i]n addition” language, with which the second sentence of the quoted paragraph begins, would make no sense.
As the legislative history of the CEA makes clear, Congress enacted the exclusive jurisdiction proviso of § 2(a)(1) so that trading in commodity futures, and related activities with a direct nexus to futures trading, such as discretionary futures accounts, and options on futures contracts, would be subject to regulation by the CFTC only.2 But the same rationale does not apply to options on actuals, which, unlike options on futures, do not have any necessary connection with futures trading. Options on GNMA securities were traded over-the-counter for at least five years prior to the initiation of GNMA futures trading,3 just as options on stocks have been traded for eight years on the CBOE without the existence of any futures trading in stocks. See SEC Record 399-401, 661-68. The existence of such an autonomous GNMA options market both before and after enactment of the 1974 CEA, renders extremely dubious any claim that Congress intended to put such options under the CFTC’s exclusive jurisdiction in 1974. This history of over-the-counter trading also casts considerable doubt on the thesis that options on GNMA securities are among the “commodity options” regulated by sections 4c(b) and 4c(c) of the CEA. See Part V infra.
The current Chairman of the CFTC, in a 1975 article, flatly and succinctly rejected the majority’s conclusion that the CFTC has exclusive jurisdiction over options on commodity/securities such as GNMAs.
The CFTC’s exclusive jurisdiction . . . [does] not extend to securities options *1170such as those traded on the Chicago Board Options Exchange, since such options when exercised, do not result in the delivery of a futures contract.
Johnson, The Perimeters of Regulatory Jurisdiction Under the Commodity Futures Trading Commission Act, 25 Drake L.Rev. 61, 68 (1975) (emphasis supplied).4 Other commentators have consistently construed the CFTC’s exclusive jurisdiction under section 2(a)(1) to reach options on futures, but not options on the underlying tangibles or intangibles. See, e.g., Bromberg, Commodities Law and Securities Law — Overlaps and Preemptions, 1 J.Corp.L. 217, 313 (1976); Long, Commodity Options — Revisited, 25 Drake L.Rev. 75, 132 (1975); Guttman, The Futures Trading Act of 1978: The Reaffirmation of CFTC — SEC Coordinated Jurisdiction over Securities/Commodities, 28 Am.U.L.Rev. 1, 30 (1978).
The majority’s almost total reliance on the word “involving” in the exclusive jurisdiction clause to bear the crushing burden of options on actuals is to rest the Rock of Gibraltar on a toothpick. The phrase “transactions involving contracts of sale of a commodity for future delivery” is of ancient origin and established meaning. In the Grain Futures Act of 1922 the phrase “[tjransactions in grain involving the sale thereof for future delivery as commonly conducted on boards of trade” was used to distinguish futures transactions from certain other grain transactions.5 This section of the Grain Futures Act of 1922 (derived from the Futures Trading Act of 1921) applied only to futures contracts and options on futures. See Trusler v. Crooks, 269 U.S. 475, 481-82, 46 S.Ct. 165, 166; 70 L.Ed. 365 (1926). Moreover, the policy declaration currently found in § 5 of the CEA, which has survived intact6 since the Grain Futures Act of 1922, contains the precise “involving” construction found in the CFTC’s exclusive jurisdiction clause. 7 Certainly, it is reasonable to assume that by using an existing phraseology, derived from old statutes of clear meaning, Congress in 1974 intended to encompass only the type of options transactions which had previously been regulated under the CEA and predecessor statutes.8
An additional reason for Congress to use the term “involving” (rather than the preposition “in”) in the exclusive jurisdiction clause is that such a construction was necessary to comport with the clause’s earlier reference to “accounts” and “agreements.” As the current Chairman of the CFTC has explained, the Senate Agriculture and For*1171estry Committee in 1974 modified the proposed exclusive jurisdiction clause to apply to “accounts” and “agreements” as well as transactions in futures contracts. “This important change extended the Act to the activities surrounding trading, such as the regulation of so-called ‘discretionary accounts’ or ‘discretionary agreements’ common in futures trading, which had sometimes been treated as ‘securities’ in the courts.” Johnson, The Commodity Futures Trading Commission Act: Preemption as Public Policy, 29 Vand.L.Rev. 1, 14 (1976).9 The Senate language prevailed in the Conference Committee. With the addition of “accounts” and “agreements,” it was necessary, to achieve any semblance of precision, to employ the term “involving,” rather than the preposition “in,” and there is no suggestion in the legislative history that this choice of preposition somehow acted to extend the CFTC’s exclusive jurisdiction to options on actuals in contrast to options on futures contracts. In fact, by specifying that the term “agreement” in § 2(a)(1) includes an “option,” Congress indicated that the complementary phrase “transactions involving contracts of sale . . . for future delivery” did not. Any other reading would render Congress’ express reference to “option” wholly redundant and would thus violate the fundamental maxim of statutory construction that “a Legislature is presumed to have used no superfluous words.” Platt v. Union Pacific R. R. Co., 99 U.S. 48, 58, 25 L.Ed. 424 (1878).
A more fundamental problem with relying on the term “involving” to drag in options on the actual underlying eommodity/security is that such a construction proves far, far too much. If, as the majority contends, trading in commodity options necessarily “involves” commodity futures, then all security options could become subject to the CFTC’s exclusive jurisdiction as soon as anyone commenced futures trading in the underlying financial instrument. This is not merely a parade of horribles argument since at least one commodities exchange has applied for permission to trade futures in American Telephone and Telegraph Company bonds. 46 Fed.Reg. 30,844 (1981).10 The Chicago Board of Trade itself has applied for designation as a contract market to trade averages of groups of corporate stocks. 46 Fed.Reg. 7042 (1981).11
The majority of course, recognizes some of the pitfalls into which its “involving” argument must lead. It responds with tortured and unsupportable distinctions between exempt and nonexempt securities and traditional and nontraditional commodities. See ante at 1150-1152. These distinctions are not to be found in the CEA, and they simply do not withstand serious analysis. Moreover, the very need to manufacture such “limits” demonstrates the implausibility of the majority’s reliance on the term “involving” to revolutionize (and unfortunately, to disrupt) the jurisdictional relationships among federal security and commodity regulatory agencies.
As a practical matter, the view of the majority that trading in GNMA options necessarily “involves” GNMA futures is purely speculative (no pun intended) and finds no support in the record. The SEC in this administrative proceeding found as a fact that options and futures were separate *1172and distinct instruments and that GNMA options could be regulated separately from GNMA futures.12 We must accept these findings unless they are unsupported by substantial evidence. See 15 U.S.C. § 78y(a).13 In any event, even the majority admits that futures contracts and options are legally and historically distinct instruments. Ante at 1139, 1151-1152. An option on a GNMA security imposes a duty to perform on only one party, the writer of the option. The holder of the option, by contrast, is under no obligation to exercise the option or enter into any later transaction, having acquired this right through payment of a premium. The unique feature of an options contract is the ability of its holder to limit any potential for loss to the amount of the premium paid for the option. See generally, Moriarty, Phillips & Tossini, A Comparison of Options and Futures in the Management of Portfolio Risk, Financial Analysts Journal 61, 62 (Jan./Feb. 1981). In direct contrast to this feature, each party to a futures contract assumes an unconditional obligation to perform.14 To *1173be sure, parties trading either options or futures in organized markets will, in practice, generally enter into off-setting transactions to liquidate their positions prior to the expiration of the option or futures contract. The availability of an off-set market, however, cannot duplicate the unique function performed by the option in limiting the extent of the holder’s possible loss. See, e.g, SEC Record 350, 438, 466. Anyone who has sold futures in a market which subsequently rises inexorably has no difficulty distinguishing a futures contract from an option. Moreover, both the courts and the CFTC have recognized that commodity options are not the same thing as commodity futures. See Precious Metals Associates, Inc. v. CFTC, 620 F.2d 900, 905 (1st Cir. 1980) (distinguishing between commodity options and commodity futures contracts); CFTC v. U.S. Metals Depository Co., 468 F.Supp. 1149, 1155 (S.D.N.Y.1977) (same); CFTC v. Crown Colony Commodity Options, Ltd., 434 F.Supp. 911, 913-14 (S.D.N.Y.1977) (same); Reauthorization of the Commodity Futures Trading Commission, Hearings Before the Senate Subcomm. on Agricultural Research and General Legislation of the Comm, on Agriculture, Nutrition and Forestry, 95th Cong., 2d Sess. 361-62 (1978) (same distinction made by the then Chairman of the CFTC).
I am willing to presume that there is some economic linkage between GNMA options and GNMA futures. The price of both is presumably linked to the inflation rate, the size of the federal deficit, the Federal Reserve Board’s growth target for the money supply, prospects for growth or decline in the economy, etc. I am also willing to concede that both options and futures may be used to “shift risks” — to permit those who hold GNMA’s in inventory to shift the risk of price decline. But none of this tells me that options and futures must therefore be traded under the roof of the same exchanges or that such trading must necessarily be regulated by the same government agency. It is not for us to torture the plain language of statutes or ignore traditional regulatory arrangements merely because we perceive economic linkages or similarities in economic function among various financial instruments.15 Presumably Congress has the benefit of these economic insights and may dispose as it sees fit. But certainly there is nothing in the record or elsewhere requiring the conclusion that GNMA options inextricably “involve” GNMA futures and that the regulatory scheme must be recast to reflect such an “involvement.” 16
*1174The majority’s reliance on the statement of the 1974 Senate Committee that “the [CFTC’s] jurisdiction over futures contracts markets or other exchanges is exclusive and includes the regulation of commodity accounts, commodity agreements and commodity options,” ante at 1146, 1147, is similarly misplaced. This statement expressly limits the CFTC’s exclusive jurisdiction to options and trading agreements on commodity futures contracts, since those are the only types of collateral transactions which take place on a futures contract market or other exchange subject to the CFTC’s regulatory jurisdiction.17 Any other reading of the statement would produce unintended and extreme results, since it would give the CFTC exclusive jurisdiction over any commodity/security transaction taking place on any security exchange, a construction which would presumably include accounts and agreements relating to the trading of actual GNMA certificates as well as GNMA options.
Nor does the fact, that Congress, in 1975 and 1978, rejected the SEC’s attempts to
abolish CFTC jurisdiction over all transactions in GNMA’s (and other security/commodities) support the majority’s broad “involving” theory. The SEC proposals rejected by Congress in 1975 and 1978 would have prohibited the CFTC from exercising jurisdiction over any transaction, including a futures contract, involving any security.18 See, e.g., Hearings on H.R. 10285 Before the Subcommittee on Conservation and Credit of the House Committee on Agriculture, 95th Cong., 2d Sess. Ser. No. 95-QQ187-88, 209 (1978) (statement of SEC Chairman Harold Williams); Hearings Before the Senate Subcommittee on Banking, Housing and Urban Affairs on § 249, 94th Cong., 1st Sess. 244 (1975). It was this withdrawal of CFTC jurisdiction over futures trading, including options on such futures contracts, that Congress was unwilling to countenance.19 The majority’s attempt to use this Congressional decision to support its thesis that Congress intended to vest the CFTC with exclusive jurisdiction over options on the underlying securities themselves finds no support in the statute or its legislative history.20 The majority’s *1175citation of International Trading, LTD v. Bell, 262 Ark. 244, 556 S.W.2d 420, 425-26 is similarly inapposite since the court, in that case, was concerned solely with the CFTC’s jurisdiction over options on commodity futures contracts.21
Equally damaging to the majority’s interpretation of the subsequent legislative history of the CEA is the fact that at the same time Congress rejected the SEC’s attempts to remove CFTC jurisdiction over futures trading in the newly developing security/commodities, it adopted amendments to the CEA specifically directing the CFTC to “maintain communications” with the SEC regarding the potentially overlapping jurisdiction of those two agencies. 7 U.S.C.A. § 41a(g)(2) (1980). If, as the majority contends, the CFTC possessed exclusive jurisdiction over the trading of security options as well as security futures, there would seem to be little purpose in requiring the two agencies to confer and cooperate on jurisdictional matters. Indeed, the 1978 House Conference Report, explaining the import of this amendment, noted that it “requires the [CFTC] to maintain communication with the Department of the Treasury, the Board of Governors of the Federal Reserve System, and the SEC [in order] . . . to consider the relationship between the volume and nature of investment and trading in futures, compared to securities and financial instruments within their jurisdiction.” H.Conf.Rep. 1628, 95th Cong., 2d Sess. 17 (1978), reprinted in [1978] U.S. Code Cong. & Ad. News 2178 (emphasis added). Such a choice of wording clearly reflects Congress’ continuing awareness that only investment and trading in financial futures falls within the exclusive jurisdiction of the CFTC. At the very least, this statutory directive evinces Congress’ strong desire that the SEC and the CFTC consult and cooperate for the purpose of devising an acceptable sharing of jurisdiction over instruments in which both agencies possess an interest. It is precisely this statutorily mandated process of cooperation and consultation that the majority opinion now seeks to dismantle.
II.
The legislative history of both the 1974 and the 1978 amendments to the CEA indicates that the SEC “Savings Clause” was designed to preserve SEC jurisdiction over all security options, including options on GNMAs. Perhaps the clearest indication of this Congressional intent is found in the Senate Report accompanying the 1974 Amendments:
The committee intends that options not be traded except on organized exchanges and in conformity with the rules and regulations of the Commission. However, the Commission would not have the authority to regulate trading in puts and calls for securities. Where traded on exchanges, these puts and calls are regulated by the Securities and Exchange Commission. Where traded among banks, they are regulated by the bank regulatory agencies.
1974 Senate Report at 26, reprinted in [1974] U.S. Code Cong. & Ad. News 5866 (emphasis supplied).22
*1176Other portions of the 1974 Senate Report confirm Congress’ clear desire to exempt from the CFTC’s exclusive jurisdiction all trading in securities and security options not conducted on a commodity futures exchange. Thus, in its “Section-By-Section Analysis” of the 1974 Amendments, the Senate Report states:
Section [2(a)(1) ] . . . enlarges the definition of “commodity” . . . and provides for the exclusive jurisdiction of the Commission over all futures transactions which are executed on domestic boards of trade. The Commission will have exclusive jurisdiction over options trading in commodities (but not in securities).
1974 Senate Report at 31, reprinted in [1974] U.S. Code Cong. & Ad. News 5870 (emphasis added).23 Similarly, the 1974 Conference Report explains:
Under the exclusive grant of jurisdiction to the [CFTC], the authority in the Commodity Exchange Act . . . would preempt the field insofar as futures regulation is concerned.
S.Rep.No.1194, 93d Cong., 2d Sess. 35 (1974) (emphasis added).24
Notwithstanding this careful limitation of the CFTC’s exclusive jurisdiction, and Congress’ repeated assertions that section 2(a)(1) of the CEA was not intended to usurp the SEC’s jurisdiction over securities and security options, several legislators remained concerned about possible unintended effects on SEC jurisdiction. In a final effort to allay this concern, both House Committee Chairman Poage and Senate Committee Chairman Talmadge made the following clarifying statement immediately prior to the vote on the 1974 CEA Amendments:
I understand that there is some concern that, in effectuating the intent to fill regulatory gaps, the conference substitute appears to have an unintended impact on the jurisdiction of the Securities and Exchange Commission.
This misconception apparently has arisen because of certain provisions in [Section 2(a)(1) ] . . ., in particular, the revised definition of commodities, the limited grant of exclusive jurisdiction to the Commodity Futures Trading Commission, and the reference to trading in futures contracts and options, not only on designated contract markets, but also on “any other board of trade, exchange or market.”
I wish to emphasize that the words “any other board of trade, exchange or market” were included only for the purpose of giving the Commodity Futures Trading Commission jurisdiction over futures contracts purchased and sold in the United States and executed on a foreign board of trade, exchange or market. This grant of exclusive jurisdiction is not to be construed as preempting the jurisdiction of the Securities and Exchange Commission over securities, including stock options, traded on any national securities exchange or any other U.S. securities market.
With respect to the definition of commodities, it was intended to apply to a broader class of goods, articles, rights and interests than previously were subject to the Commodity Exchange Act. It was not intended, however, to apply to trad*1177ing in interests and rights traditionally known as securities, including, for example, stocks, corporate bonds, warrants, and debentures; nor was it intended to apply to trading in options to purchase any of the foregoing.
120 Cong. Rec. 34,736-37, 34,997 (1974) (emphasis added).
The majority quotes only the final paragraph of this statement and seeks to interpret Chairman Poage’s reference to “interests and rights traditionally known as securities” as being limited to “corporate stocks and the like.” Ante at 1176-1177 n.22. Such an interpretation is resoundingly wrong. The corporate securities specifically enumerated by Chairman Poage were meant only as illustrative examples of the SEC’s traditional jurisdiction and were not in any way intended as limitations.25 Indeed, the current Chairman of the CFTC (then outside counsel to the CBOT) has himself described GNMA certificates as “traditional securities.” Johnson, The Commodity Futures Trading Commission Reauthorization Process: A View from the Trenches, 1974 Det.C.L.Rev. 1, 12. Even the majority does not argue that GNMA’s are not “securities,” and it seems clear that as a species of mortgage, they are unarguably “traditional.” Moreover, the three paragraphs that precede Chairman Poage’s reference to trading in traditional security interests underscore the carefully circumscribed boundaries of the CFTC’s exclusive jurisdiction.
Finally, the CFTC’s previous statements of position indicate that it has traditionally viewed the SEC “Savings Clause” as restricting to direct regulation of the futures market its own jurisdiction over security/commodities such as GNMAs. In 1975, in response to an SEC challenge, the CFTC vigorously defended its exclusive authority to approve the trading of GNMA futures on the CBOT. At the same time, however, the CFTC was careful to note that it possessed jurisdiction over government backed security/commodities such as GNMAs “solely with respect to futures trading in those instruments.”26 Indeed, until it prepared its amicus brief in the instant proceeding, the CFTC clearly believed that trading in GNMA options was excluded from the coverage of the CEA. Thus, although GNMA “standby” options27 have long existed in the over-the-counter markets, the CFTC has never regarded them as being subject to the prohibitions of CEA sections 4c(b) or 4c(e).28 In its comments to the SEC regarding the CBOE options proposal, the CFTC expressly recognized the existence of the *1178over-the-counter GNMA options market and stated that the proposed CBOE options market would be likely to result in more efficient pricing, greater liquidity, more streamlined clearing and delivery procedures, improved regulation and greater financial integrity than the existing GNMA standby options market.29 Proposed CFTC Regulation 34.1, which would exempt from the “options ban” in CEA section 4c(c) and from Parts 32 and 33 of the CFTC Regulations “any transaction in an option on exempted securities ... if conducted on a national securities exchange registered with and regulated by the SEC”30 merely confirms the CFTC’s longstanding recognition of this jurisdictional limitation.
III.
Even if it were not clear from the language of section 2(a)(1) and from the SEC “Savings Clause” that the CFTC’s exclusive jurisdiction does not extend to the trading of security options on a national security exchange, a closely related provision of section 2(a)(1) demonstrates that the CEA cannot be read to prohibit the CBOE’s proposed options program:
Nothing in this Act shall be deemed to govern or in any way be applicable to transactions in . . . security warrants, security rights, . . . government securities, or mortgages and mortgage purchase commitments, unless such transactions involve the sale thereof for future delivery conducted on a board of trade.
This exclusionary sentence — the so-called Treasury Amendment — was added to the CEA in 1974 at the request of the Department of the Treasury, which feared that absent such a clarifying amendment, the new provisions of the CEA might be construed to apply to forward trading and other kinds of transactions in government-backed financial instruments. See 1974 Senate Report at 51, reprinted in [1974] U.S. Code Cong. & Ad. News 5889. As the 1974 Senate Report makes clear, the Treasury Amendment was designed to establish beyond dispute that trading in the enumerated financial instruments would not be subject to CFTC jurisdiction “unless such trading is conducted on a formally organized futures exchange.” 1974 Senate Report at 23, reprinted in [1974] U.S. Code Cong. & Ad. News 5863. The 1978 Senate Report re-emphasized this point:
When the 1974 amendment was being considered by Congress, the Treasury recommended that the role of the CFTC with respect to Government securities be limited to futures contracts sold on organized exchanges. Congress adopted this recommendation.
1978 Senate Report at 47, reprinted in [1978] U.S. Code Cong. & Ad. News 2135 (emphasis added).
The CBOE’s proposed GNMA options fall within the plain language of the Treasury Amendment. First, an option is a right to purchase or sell the underlying security; it is, in short, a “security right[].”31 Second, every GNMA option represents a “mortgage purchase commitment” — that is, a commitment by the writer of the option to purchase (in the case of a put) or to sell (in the case of a call) the pools of mortgages represented by the underlying GNMA. Finally, GNMA securities are unquestionably “government securities.” Thus, transactions in GNMA options are “transactions in . . . government securities” under the Treasury Amendment. The majority’s sugges*1179tion that “transactions in . . . government securities” covers only transactions in which the underlying securities change hands in flatly contradicted by the structure of this passage. The Treasury Amendment provides that the CEA shall not apply “to transactions in . .. government securities, . . . unless such transactions involve the sale thereof for future delivery conducted on a board of trade.” (emphasis supplied). If, as the majority contends, “transactions in . . . government securities” referred only to the purchase and sale of the underlying financial instruments, then the clause “unless such transactions involve the sale thereof for future delivery ...” would be both superfluous and contradictory. As the majority opinion itself makes clear, the GNMA futures market, like the GNMA options market, “may exist without any transactions in the commodity itself.” Ante at 1154. See id. at 1139.
The majority also seeks to avoid the plain language of the Treasury Amendment by arguing that the Amendment was adopted by Congress “only to prevent dual regulation by the CFTC and bank regulatory agencies of the banks and other sophisticated institutions that ordinarily trade in the enumerated financial instruments.” Ante at 1154. While it is true that the Treasury Department advised Congress that trading in the enumerated instruments “generally” took place between banks and other sophisticated institutions,32 the plain language of the amendment is not qualified in any respect to limit its application to transactions among institutional participants. Where, as here, the language of a statute is unambiguous, we should not hesitate to give the words employed by Congress “their ordinary and common meaning,” Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979), at least absent “rare and exceptional circumstances.” Rubin v. United States, 449 U.S. 424, 430, 101 S.Ct. 698, 701, 66 L.Ed.2d 633 (1981). In the instant case, neither the language of the CEA nor its legislative history supports the engrafting of a “sophisticated institution” limitation onto the Treasury Amendment.33
IV.
In Part III of its opinion the majority reaches the startling conclusion that the SEC is without jurisdiction — under its own statutes — to regulate options trading in GNMA securities, a contention which, if true, would render the first two sections of the opinion entirely gratuitous. In the first place, this contention should not even be considered on this appeal, since it was not presented in the administrative proceedings before the SEC. Section 78y(c)(l) of the Securities and Exchange Act of 1934 (SEA), 15 U.S.C.A. § 78y(c)(l) (1980 Supp.), explicitly provides:
No objection to an order or rule of the Commission, for which review is sought under this section, may be considered by the court unless it was urged before the Commission or there was reasonable grounds for failure to do so.
*1180Although the CBOT, both on its own and through its attorneys, submitted extensive comments to the SEC regarding CBOE’s proposed rule change, the CBOT never contended that the SEC lacked jurisdiction, under the SEA, to regulate trading in GNMA options.34 Indeed the CBOT comments implicitly acknowledge the SEC’s jurisdiction. See SEC Record 473-89, 530. Since the CBOT has sought review in this court pursuant to section 78y of the SEA, its failure to object to SEC jurisdiction before that agency should be fatal to any such consideration here. Sartain v. Securities and Exchange Comm., 601 F.2d 1366, 1371-72 (9th Cir. 1979); Berdahl v. Securities and Exchange Comm., 572 F.2d 643, 648-49 (8th Cir. 1978).
In any event, despite the strenuous labors of the majority to establish the quite novel proposition that the SEC is without jurisdiction to regulate the trading of GNMA options on a national securities exchange, this thesis simply cannot withstand analysis. Essentially the majority argues that an option to buy or sell GNMA’s is not a “security” as defined in the Securities and Exchange Act. But the instruments on which the CBOE proposes to trade options are certainly securities evidencing an interest in a pool of federally-insured mortgages. See Davidson v. Dean Witter Reynolds, Inc., 478 F.Supp. 494, 495 (D.Colo.1979). Section 3(a)(10) of the SEA, 15 U.S.C. § 78c(a)(10) (1976), provides that the term “security” includes “any note, . . . bond, [or] debenture . . .,” and GNMA’s fall squarely within this definition. By virtue of the guarantee by GNMA of timely payment of interest and principal, backed by the full faith and credit of the United States government, GNMA certificates are also within the definition of “exempted securities” in section 3(a)(12) of the SEA, 15 U.S.C. § 78c(a)(12) (1976).
Although it is true that the SEC does not have regulatory authority over the registration of “exempted securities,” and that a number of provisions of the SEA do not apply to them, the SEC does possess considerable authority over the trading of exempted securities. Thus, the provisions of the SEA which authorize the SEC to regulate trading on national securities exchanges apply to all securities, including exempted securities such as GNMAs. See 15 U.S.C. § 78e (unlawful “to effect any transaction in a security” on an unregulated exchange); 15 U.S.C. § 78k(a) (regulation of “any transaction” on an exchange by its members); 15 U.S.C. § 78k(b) (regulation of exchange specialists and odd lot dealers); 15 U.S.C. § 78s(b)(e) (SEC power to review, abrogate, or amend exchange rules). Moreover, the general antifraud provisions of the SEA apply to the purchase or sale of “any” security, whether the transaction is effected on an exchange or in the over-the-counter market. SEA §§ 10(b), 15(c)(1); 15 U.S.C. §§ 78j(b), 78o (c)(1) (1976).35 Indeed, the SEC has been actively involved in enforcing the anti-fraud provisions of the SEA in connection with the trading of exempted securities, including over-the-counter trading in GNMAs and optional GNMA standbys.36 Since GNMA options are contracts to buy or sell GNMA securities, and since the SEC has extensive jurisdiction to regulate the trading of exempted securities, these factors alone strongly support SEC authority to approve the CBOE’s proposed GNMA options program. See Blue Chip Stamps v. Manor Drug Store, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975).
*1181Not only does the SEC have the statutory authority to regulate the trading of exempted securities, it has exercised (and is currently exercising) that authority. Exempted securities are listed and traded on several national securities exchanges,37 and those exchanges have adopted specific rules relating to the trading of exempted securities.38 The SEC has plenary authority over the adoption and amendment of such rules, and it has consistently and carefully exercised that authority.39
In addition, the GNMA options to be traded on the CBOE are themselves securities. Such options clearly fall within the statutory definition of “any instrument commonly known as a ‘security.’ ” See I L. Loss Securities Regulation 469 (2d ed. 1961). Moreover, the definition of security in section 3(a)(10) of the Securities Exchange Act expressly encompasses any “warrant or right to subscribe to or purchase” any security, which the courts have consistently construed to include “call” options on securities. See, e.g., Blue Chip Stamps v. Manor Drug Store, 421 U.S. 723, 750-51, 95 S.Ct. 1917, 1932, 44 L.Ed.2d 539 (1975); Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017, 1026 n.40 (6th Cir. 1979); Lutgert v. Vanderbilt Bank, 508 F.2d 1035, 1038 (5th Cir. 1975); Lloyd v. Industrial Bio-Test Laboratories, Inc., 454 F.Supp. 807, 810—11 (S.D.N.Y. 1978).
By the same token, “put” options — the writers of which undertake a contractual obligation to buy an underlying security upon exercise by the option holder — have a similar status as securities under the Securities Exchange Act. Sections 3(a)(13) and 3(a)(14) of that Act define the “purchase” and “sale” of a security to include, respectively, “any contract to buy, purchase or otherwise acquire” and “any contract to sell or otherwise dispose of.” As the Supreme Court has explained,
the holders of puts, calls, options and other contractual rights or duties to purchase or sell securities have been recognized as “purchasers” or “sellers” of securities * * * because the definitional provisions of the 1934 Act themselves grant them that status.
Blue Chip Stamps v. Manor Drug Store, 421 U.S. 723, 751, 95 S.Ct. 1917, 1932, 44 L.Ed.2d 539 (1975) (emphasis supplied). Moreover, lower courts and commentators have consistently indicated that both put and call options on securities fall within the broad definition of securities under section 3(a)(10) of the SEA. Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017, 1026 n.40 (6th Cir. 1979) (definition of security in section 3 of SEA “clearly includes options to purchase or sell stock”); Savino v. E.F. Hutton & Co., 507 F.Supp. 1225, 1235 (S.D.N.Y.1981) (stock options purchased and sold by defendants “undoubtedly constituted ‘securities’ within the meaning of the federal securities’ laws”); Globus, Inc. v. Jaroff, 271 F.Supp. 378, 380 (S.D.N.Y.1967) (“It is axiomatic . . . that an option agreement is a security under the 1934 Act”); I L. Loss, *1182Securities Regulation 469 (2d ed. 1961) (both put and call options are subsumed under “interest or instrument commonly known as ‘security’ ” in statutory definition). See also SEC Rule 3all-l, 17 C.F.R. § 240.3all-l (1980) (defining the term “equity security” as including “any put, call, straddle, or other option or privilege”).
Common sense strongly suggests that an option to buy or sell an interest in a pool of mortgages (traditional “securities” of impeccable credentials) must be a security by any reasonable test. I see no reason to pursue the question (which the majority harries around every twist and turn) whether options on GNMAs are “investment contract” securities (contemplating investment in a common enterprise with an expectation of profits). The essential flaw in the majority’s analysis at this point is its failure to distinguish between options (and other transactions) relating to non-security commodities, which transactions may or may not qualify as “investment contract securities” for purposes of the SEA, and options on financial instruments such as GNMAs, in which the underlying “commodity” is incontestably a “security” within the meaning of the Securities Acts.
The majority’s reliance on Teamsters v. Daniel, 439 U.S. 551, 99 S.Ct. 790, 58 L.Ed.2d 808 (1979) and Marine Bank v. Weaver, - U.S. -, 102 S.Ct. 1220, 71 L.Ed.2d 409 (1982), to support the proposition that “the context requires the GNMA options are not securities” is similarly misplaced. In both Daniel and Weaver, the question before the Supreme Court was whether certain “non-market” financial interests fell within the definition of a “security” under the SEA.40 In the instant case, unlike Daniel and Weaver, there is no doubt that the underlying instrument — a GNMA — is itself a “security.” The only question is whether a particular derivative of that instrument — a GNMA option — is equally a security. Hence, in the present case, unlike Daniel and Weaver, where the share of the pension plan and the bank certificate of deposit, respectively, were not derived from an admitted “security,” we are concerned with something that is, at the very least, intimately tied to securities trading. One might well call one’s broker to trade a GNMA option but surely not a pension plan share or a certificate of deposit.41
In addition, in both Daniel and Weaver the Supreme Court relied heavily on the presence of an alternative “comprehensive” regulatory framework, governing the precise interest or instrument over which the SEC was attempting to assert jurisdiction. In the instant case, by contrast, as the majority itself points out, the “alternative” system of regulation has, in fact, authorized only the trading of GNMA futures and options on such futures; it does not purport to regulate options trading in the underlying GNMAs. See ante at 1144 & nn.13, 15. Indeed by its transmittal to Congress of proposed Exemptive Rule 34.1, the CFTC has indicated that it has neither the expertise nor the desire to regulate the trading of *1183GNMA options on a national securities exchange. See note 30 supra. The “contextual” analysis employed by the Supreme Court in Daniel and Weaver is thus of little relevance to the instant case.
V.
Having determined that trading in GNMA options does not fall within the exclusive jurisdiction of the CFTC, and that both GNMAs and GNMA options are clearly “securities” within the meaning of the SEA, the final question to be considered is whether sections 4c(b) and 4c(c) of the CEA give the CFTC the power to ban the trading of GNMA options on a national security exchange. By the majority’s own logic, the answer must be “No.” The SEA “Savings Clause” contained in CEA § 2(a)(1) states that “except as hereinabove provided, nothing contained in this section shall [limit the jurisdiction of the SEC].” The language “hereinabove provided” refers specifically to the CFTC’s exclusive jurisdiction clause and does not include the broad definition of “commodity” found in § 2(a)(1). See ante at 1145. Since the definition of “commodity” is “in this section” but not “hereinabove provided,” that definition cannot limit SEC jurisdiction. Thus, the expanded definition of commodity, which is incorporated in §§ 4c(b) and 4c(e), cannot be used to invalidate the SEC rule at issue here.
I could be content with this logic (favored by the majority), which shuts the door tight on the CFTC. Alternatively, one could reach the same result via a plain-language interpretation of the Treasury Amendment. See p. 1178 supra. But even if we were to forego the majority’s logic, and recognize the application of §§ 4c(b) and 4c(c) to the instant problem, we would come out at the same place as a practical matter. The CFTC has now carried out the mandate of these sections by authorizing the SEC to regulate options trading on the CBOE and other security exchanges. On February 19, 1982, pursuant to its authority under sections 4c(b), 4c(c), and 8a(5)42 of the CEA, the CFTC submitted to Congress Proposed Rule 34.1 which, “if adopted, would exempt from the prohibition of section 4c(c) and from Parts 32 and 33 of the [CFTC] Regulations, any transactions in an option on exempted securities, certificates of deposit, and foreign currency if conducted on a national securities exchange registered with and regulated by the SEC.”43 Thus, if the *1184CFTC has concurrent jurisdiction over trading in GNMA options by virtue of § 4c(b) or 4c(c), it has exercised that jurisdiction to clear the way for SEC regulation.
VI.
During oral argument of this case, Judge Campbell announced in no uncertain terms his view that, instead of cluttering the docket of this court, the SEC and the CFTC should carry out their statutory mandate to resolve among themselves any jurisdictional conflicts. They have now resolved their differences in a way which is consistent with almost any decision by us except the strained conclusion of the majority that the CFTC has exclusive jurisdiction and the SEC is wholly without jurisdiction to regulate the trading of GNMA options. Not only have we done our best to frustrate the efforts of the concerned regulatory agencies at compromise, but we have managed to conclude that an agency of long experience and high reputation must fully abandon its field of expertise in favor of a new and relatively untested regulatory body of uncertain prospects.44 As a practical matter, we have determined that the jurisdiction of the SEC is frozen and capped, and that the regulation of options trading on a host of newly developing security/commodities will fall to the exclusive jurisdiction of the CFTC.45 Perhaps all of this will have a happy ending (and a warm reception from Congress). My own surmise is that the strained analysis of the majority will gain no more attractive practical result in the real world than it has achieved conceptual triumph in the world of theory.
I therefore respectfully dissent.

. The term “actual” refers to the underlying commodity (corn, wheat, silver, pork bellies), security (General Motors stock) or security/commodity (GNMA’s) in which futures contracts or option contracts are traded.

. See S.Rep.No.850, 95th Cong., 2d Sess. 5-13, reprinted in [1978] U.S.Code Cong. & Ad.News 2093-2101 (detailing history of futures trading in United States and describing as purpose of the CFTC, the provision of a uniform regulatory structure covering all aspects of futures trading in both the regulated and unregulated commodities); S.Rep.No.1131, 93rd Cong., 2d Sess. 13-17, reprinted in [1974] U.S.Code Cong. & Ad.News 5856-60 (describing mechanics of futures trading and detailing need for centralized regulatory agency to oversee such trading); Johnson, The Commodity Futures Trading Commission: Preemption as Public Policy, 29 Vand.L.Rev. 1, 18 (1976) (clear that 1974 Congress “intended the CFTC to be the sole regulatory authority for the futures industry”).

. Trading in GNMA futures contracts began in 1975 when the CFTC designated the Chicago Board of Trade as a contract market for GNMA futures. SEC Record 634.

. The majority attempts to minimize this explicit conclusion by one of the nation’s foremost commodities experts by arguing that Johnson, in his 1975 article, “could cite no authority for this mistaken conclusion.” Ante at 1147 n.18. However, as outside counsel to the Chicago Board of Trade at the time the exclusive jurisdiction clause was enacted, Mr. Johnson was certainly in a favorable position to interpret the scope of the jurisdictional grant for which he and his client were primarily responsible. See ante at 1146, 1147. Moreover, it is, to say the least, inconsistent for the majority to use Johnson’s legal analysis to support several aspects of their “involving” theory (see, e.g., ante at 1145 n.16; 1146, 1147), yet to dismiss so cavalierly by explicit conclusion regarding the limited scope of the CFTC’s exclusive jurisdiction.

. See Act of Sept. 21, 1922, ch. 369, § 3, 42 Stat. 999.

. Except for the substitution of “commodity” for “grain” in 1936. See Act of June 15, 1936, ch. 545, § 2, 49 Stat. 1491.

. 7 U.S.C. § 5 (1980) provides in pertinent part:
Transactions in commodity involving the sale thereof for future delivery as commonly conducted on boards of trade and known as “futures” are affected with a national public interest;
(emphasis supplied).

. It may well be true, as both the majority and the CBOT have argued, that much of the divergence between securities options trading and futures trading “has been fortuitous.” Ante at 1140 n.2. Given this divergence, however, it is the job of Congress, not this court, to reunite the two markets if it so desires. Surely, not even the majority would suggest that the corporate stock options currently being traded on the CBOE have been brought within the CFTC’s exclusive jurisdiction as a result of the trading in stock index futures recently inaugurated on the Kansas City Board of Trade. See note 11 infra.

. This desire to extend the CFTC’s exclusive jurisdiction to collateral activities surrounding futures trading also explains the “relating to” language proposed by the House Committee on Agriculture. See Johnson, 29 Vand.L.Rev. at 10-11; Majority Opinion at 1146-1147.

. Unlike the majority, ante at 1151 & n.26, I do not purport to characterize American Telephone and Telegraph bonds as either “legitimate” or “illegitimate” commodities, whatever those terms may denote. Rather, I regard the potential for futures trading in AT&T bonds as demonstrating the fundamental flaw in the majority’s analysis. Under the clear definitional provisions of the CEA, AT&T bonds will become “commodities” within the meaning of the Act as soon as futures trading on them has been authorized. And, according to the majority’s “involving” theory, once AT&T bonds have become “commodities” all options trading on the underlying financial instrument will be subject to the CFTC’s exclusive jurisdiction, a result which I do not believe Congress could possibly have intended.

. Indeed, trading in such stock-index futures has already begun on the Kansas City Board of Trade. Wall St. J., Feb. 25, 1982, at 30.

. See, e.g., SEC Record 2-i (distinguishing between GNMA futures and GNMA options trading and rejecting CBOT contention that proposed GNMA options are within the jurisdiction of the CFTC). See also Comment Letters reprinted at Id. 365-66 (futures “are not a consistently useful vehicle for hedging the risk present in the conventional loan origination market”), and Id. 466 (GNMA futures market is a mandatory delivery market and, as such does not serve the same economic function as an options market).

. The administrative history of the challenged SEC order demonstrates that the SEC carefully considered all aspects and implications of GNMA options trading before approving CBOE’s requested rules change. On May 12, 1980, the SEC published notice of CBOE’s proposed rules change and invited public comments to be filed by July 15, 1980. It also wrote to a number of Government agencies, including the CFTC, to inform them officially of CBOE’s proposal and to furnish them with a copy of CBOE’s proposed rules for trading GNMA options. The SEC again wrote to the same Government agencies on July 11, 1980, specifically to request comments on CBOE’s proposal. On July 24, 1980, the SEC issued a news release extending the public comment period to September 1, 1980, and soliciting additional comments concerning particular features of CBOE’s proposed options contract, including an evaluation of the market and regulatory environments within which these instruments would be traded. See SEC Record 116— 27.
The SEC received 85 comment letters concerning the CBOE proposal, all but one of which — the submission of the CBOT — were essentially supportive. SEC Record 4. These included comments from interested Government agencies — the Government National Mortgage Association, the Department of Housing and Urban Development, the Department of the Treasury, the Federal Reserve Bank of New York, the Board of Governors of the Federal Reserve System and the CFTC — as well as from a large number of mortgage bankers, the Mortgage Bankers Association of America, a number of investment bankers and securities dealers, and the Securities Industry Association. In general, these comments emphasized (1) that options on GNMA securities had been a traditional financing vehicle in the mortgage banking industry and were essential to sound construction financing; (2) that for a variety of economic reasons GNMA options had generally become unavailable in the dealer (over-the-counter) markets; (3) that GNMA options serve needs that are not filled by the availability of futures contracts; and (4) that there was an urgent public need for the prompt approval and implementation of the type of GNMA option market proposed by CBOE. The comment letters also noted that the proposed CBOE market would greatly enhance the regulatory environment for the trading of GNMA options and would be likely to cure the abuses that had been occurring in the over-the-counter GNMA options market. See SEC Record 471, 519, 522-27, 534-37, 635.
On February 26, 1981, the SEC entered its order approving CBOE’s proposed rules change. The SEC expressly found that “it is appropriate for the CBOE to amend its rules to provide for trading of options on GNMA securities” and that “the proposed rule change is consistent with the requirements of the [Securities Exchange] Act and the rules and regulations thereunder and, in particular, the requirements of Section 6.” SEC Record 13. The SEC considered the arguments raised by the CBOT that GNMA options were within the CFTC’s jurisdiction and subject to the ban on commodity options provided in the CEA, but rejected these arguments on the ground that “the CEA is not applicable to the trading of options on GNMA securities, particularly where the trading is on a national securities exchange.” SEC Record 4 n. 13.

. Congress, in both 1974 and 1978, was well aware of the difference between options and futures. The 1978 Senate Report defines “Futures Contract” as “A firm commitment to de*1173liver or receive a specified quantity and grade of a commodity during a designated month with price being determined by public auction among exchange members.” S.Rep.No.850, 95th Cong., 1st Sess. 128 (1978), reprinted in [1978] U.S.Code Cong. & Ad.News 2165 (emphasis added). The same Senate Report defines an “Option” as
(1) A term sometimes erroneously applied to a futures contract . . .
(2) The right, acquired for a price, to buy and sell a commodity at an agreed upon price within a specified time.
Id. at 132, reprinted in [1978] U.S.Code Cong. & Ad.News 2169 (emphasis supplied). See also 1974 House Report at 130 (defining futures contract as a “legally binding commitment to deliver or take delivery of a given quantity and quality of a commodity at a price agreed upon when the contract is made.... ”).

. Moreover, as both Congress and the CFTC have recognized, there is also a strong economic linkage between futures trading and trading in the underlying actual commodities. See, e.g., 7 U.S.C. § 4a(g)(2) (1980). Indeed, one basic justification for a futures market is that futures trading in a central location performs a “price discovery” function for the underlying commodity, thereby furnishing producers and users a reference point for their pricing on the cash market. See 1974 Senate Report at 12; Majority Opinion at 1151. Congress has, in fact, required the CFTC, in determining whether to approve a proposed futures contract, to assess whether the contract will fulfill such a “price discovery” function for the interdependent cash market. See 1974 House Report at 12; 1974 Conference Report (H.R.Rep. No. 1383, 93d Cong., 2d Sess.) at 36. The logical import of the majority’s “involving” theory would thus appear to extend the CFTC’s exclusive jurisdiction to transactions in the cash commodities themselves, notwithstanding Congress’ clear intent to the contrary.

. Indeed it seems naive to argue, as the majority appears to, ante at 1151-1153, that giving exclusive jurisdiction over the trading of GNMA options to an agency already experiencing severe difficulties combating manipulation and deceptive trading practices in the commodities industry, see note 44 infra, rather than to an agency that has consistently demonstrated its ability to effectively regulate securities trad*1174ing, will minimize the potential for manipulation and abuse. Nor do the portions of the SEC record cited by the majority support its anti-manipulation argument, since the opportunities for intra-market manipulation discussed in those comment letters (written in response to specific SEC inquiries) will exist regardless whether trading in GNMA options and GNMA futures is regulated by the same or different agencies. Finally, the 1978 testimony of then SEC Chairman Williams, quoted in footnote 27 of the majority opinion, runs directly counter to the majority’s policy argument, since Williams, at the time, was advocating that jurisdiction over all forms of security trading — including futures trading — be vested in the SEC.

. See Securities and Exchange Comm. v. Weeks Securities, Inc., 483 F.Supp. 1239, 1245 (W.D.Tenn.1980).

. Thus, in 1978, the proposed SEC amendment would have rendered illegal the extensive trading in GNMA futures then taking place on the CBOT.

. S.Rep.No.850, 95th Cong., 2d Sess. 22-23, reprinted in [1978] U.S.Code Cong. & Ad.News 2110-11.
The changing nature of futures markets has stimulated the proposals of the SEC and the Department of the Treasury for increased jurisdiction by them in specifíc areas of futures trading. In each case, their proposals stem from their interest in certain underlying “commodities” . . .
The committee understands the basis of the Securities and Exchange Commission proposal and appreciates the interest of the Department of the Treasury in examining the integrity of markets for Government securities. However, the basic conclusion reached in 1974 that there should be a single regulatory agency responsible for futures trading is as valid now as it was then.
(emphasis added). See also Johnson, The Commodities Futures Trading Commission Reauthorization Process: A View From the Trenches, 1979 Det.Col.L.Rev. 1, 3-4, 13-14 (SEC proposal “urged that all forms of trading in securities — futures, options and ordinary sales — should be ‘vertically integrated’ in one agency: the SEC. . . . The SEC’s proposal was to redefine the term ‘commodity’ so that the CFTC would lose jurisdiction entirely and the SEC (and Treasury) would replace it.”)

. The majority relies on a 1975 letter written by the SEC chairman Ray Garrett, Jr. stating that, without the SEC’s proposed amendment, § 2(a)(1) of the CEA “may well call into question the continuing jurisdiction of the SEC over options trading, including that on the CBOE and the American Stock Exchange, Inc.,” ante at 1149. Congress quite reasonably concluded that these fears were unwarranted, since both *1175the language and the legislative history of § 2(a)(1) preserved SEC jurisdiction over options trading in securities. See, e.g., 1974 Senate Report at 26, reprinted in, [1974] U.S.Code Cong. & Ad.News 5866; 120 Cong.Rec. 34, 736-37 (1974) (remarks of Representative Poage).

. See 556 S.W.2d at 422 (defining relevant commodity option as “a contract right ... to buy from or sell to the option seller, the underlying commodity futures contract at a fixed price ... at any time during the life of the option.”) (emphasis added).

. Examination of this statement in its entirety renders untenable the majority’s suggestion that the Senate Committee’s reference to “securities” in this passage covers only “traditional, corporate stocks” and does not include “nontraditional [financial] instruments” such as GNMAs. Ante at 1148 & n.22. Under 12 U.S.C.A. § 24 (1980 Supp.) nationally chartered banks are generally prohibited from owning or dealing in corporate stocks and bonds. Most state banks are subject to similar restrictions. See, e.g., Ill.Rev.Stat. ch. 17, §§ 3130, 3131 (1981); Ind.Code §28-1-11-4 (1976); 26 Wis.Stat.Ann. § 219.01 (1957 & 1981 Supp.). Cf. Cal.Fin.Code § 1364 (1968 § 1981 Supp.) (allowing state banks to invest up to 10% of their savings deposits in debt instruments of U. S. corporations meeting strict financial requirements). Since the final sentence of the Senate Report explicitly refers to “puts and calls for securities” that are traded *1176among banks, the phrase must necessarily include options on non-corporate financial instruments such as GNMAs.

. See also 1974 Senate Report at 23, reprinted in [1974] U.S.Code Cong. & Ad.News 5863:
While the Committee did wish the jurisdiction of the Commodity Futures Trading Commission to be exclusive with regard to the trading of the futures on organized contract markets, it did not wish to infringe on the jurisdiction of the Securities and Exchange Commission ....

. The suggestion of the majority, ante at 1149, that preserving SEC jurisdiction over the trading of security options on a national security exchange might somehow allow the CBOE to “trade wheat options or onion futures” is ridiculous since — unlike GNMAs — neither wheat nor onions can possibly be characterized as a security. The majority’s further contention that “the dissent thus reads the legislative history inconsistently with the clear words of the statute” is similarly flawed, since the purportedly broad statutory reach to which the majority refers depends entirely on its strained construction of the term “involving.”

. See P. C. Pheiffer Co. v. Ford, 444 U.S. 69, 77-78 n.7, 100 S.Ct. 328, 334-335 n.7, 62 L.Ed.2d 225 (1979) (“including” indicates that subsequent terms “comprise a part of the larger group”); Federal Land Bank v. Bismark Lumber Co., 314 U.S. 95, 100, 62 S.Ct. 1, 4, 86 L.Ed. 65 (1941) (“the term ‘including’ is not one of all-embracing definition, but connotes simply an illustrative application of the general principle”).

. Memorandum of the Office of the General Counsel of the CFTC Concerning the Exclusive Jurisdiction of the Commission over Futures Transactions, [1975-1977 Transfer Binder] Comm.Fut.L.Rep. (CCH) fl 20,177, at 20,834 (Dec. 8, 1975) (emphasis added). See id. at 20,835 (CEA grants CFTC exclusive jurisdiction “over futures transactions executed on any organized board of exchange or trade;” SEC jurisdiction “limited to activities not meeting the foregoing description.”).

. A “standby” option is a forward contract giving one party to the contract the option to make delivery of specified GNMA securities at or before a specified date. This arrangement is also denominated a “put” option. See SEC Record 376, 397, 435; Majority Opinion at 1158.

. For example, in November, 1976, the CFTC adopted comprehensive commodity option regulations, 17 C.F.R. § 32.1 et seq., 41 Fed.Reg. 51808, et seq. (Nov. 24, 1976), to govern options transactions in the newly regulated commodities. Part 32.2 of these regulations absolutely prohibited all options transactions “involving . . . any contract of sale of any commodity for future delivery traded on or subject to the rules of any contract market” (emphasis supplied). Although Part 32.4 of these regulations exempted so-called “dealer options” from some CFTC restrictions, this exemption did not apply to the absolute prohibition found in Part 32.2. Thus, if the majority’s interpretation of the phrase “transactions involving contracts of sale of a commodity for future delivery...” were correct, these 1976 regulations would have completely shut down the then existing GNMA standby market.

. See SEC Record 631-35.

. 47 Fed.Reg. 7677, 7678 (Feb. 22, 1982) (footnote omitted) (emphasis supplied). Pursuant to section 4c(c) of the CEA, the CFTC transmitted this proposed rule to the House and Senate Agriculture Committees on February 19, 1982. See also note 43 infra.

. The majority’s rejection of this argument on the grounds that while a call option may be characterized as a security right, a put option cannot, would lead to the absurd result that the CFTC would have jurisdiction over one-half of the CBOE’s proposed options market (the put options), but not the other. Moreover, courts and commentators have routinely held that both put and call options constitute “security rights.” See, e.g., Mansbach v. Prescott Ball & Turben, 598 F.2d 1017, 1026 n.40 (6th Cir. 1979); Securities & Exchange Comm. v. American Commodity Exchange, Inc., 546 F.2d 1361, 1366-67 (10th Cir. 1976); Securities & Exchange Comm. v. G. Weeks Securities, Inc., 483 F.Supp. 1239, 1242-44 (W.D.Tenn.1980); I L. Loss, Securities Regulation 469 (2d ed. 1961).

. See Letter from Donald L. E. Ritger, Acting General Counsel, Department of the Treasury to Hon. Herman E. Talmadge, Chairman, Senate Comm, on Agriculture and Forestry, July 30, 1974, reprinted in 1974 Senate Report at 49-51.

. Indeed the legislative history strongly indicates that no such limitation was intended. See 1974 Senate Report at 31, reprinted in [1974] U.S.Code Cong. & Ad.News 5870 (“However, transactions in foreign currency, security warrants and rights . . . government securities or . . . mortgage commitments would not be subject to the act unless they involve the sale thereof for future delivery conducted on a Board of Trade”); 1978 Senate Report at 47, reprinted in [1978] U.S.Code Cong. & Ad.News 2135 (role of CFTC with respect to Government securities “limited to futures contracts sold on organized exchanges”).
The majority’s suggestion, ante at 1154-1155 n.34, that the plain language of the Treasury Amendment is supported by “only the text of a letter to the Senate Committee from the Treasury Secretary” is thus incorrect, and is further refuted by the very portion of the 1974 Senate Report quoted by the majority. As that portion of the 1974 Senate Report explains:
[Regulation by the [CFTC] of transactions in the specific financial instruments . . ., which generally are between banks and other financial institutions, is unnecessary unless executed on a formally organized futures exchange.
Ante at 1154-1155 n.34, quoting 1974 Senate Report at 23, reprinted in [1974] U.S.Code Cong. & Ad.News 5863-64 (emphasis added).

. Nor did the CFTC raise this argument in its comments to the SEC. See SEC Record 630-41.

. This result is sensible from a regulatory viewpoint since unscrupulous dealers may engage in fraudulent selling practices involving government-related securities even though the securities themselves are sound. See SEC Record 470-71. As GNMA itself recently noted, “[w]hile the integrity of the [GNMA] securities is absolutely sound, abuses in the way in which the securities are sold, financed, and traded” have occurred. 45 Fed.Reg. 40,556 (1980).

. See, e.g., SEC v. G. Weeks Securities, Inc., 483 F.Supp. 1239 (W.D.Tenn.1980); SEC v. Harwell, SEC Lit.Rel. No. 8559 (1978); SEC v. Winters Gov't Sec. Corp., SEC Lit.Rel. No. 8202 (1977); In re Merrill Lynch, Pierce, Fenner & Smith, SEA Rel. No. 11515, reprinted in [1975-1976 Transfer Binder] Fed.Sec.L.Rep. (CCH) U 80,216 (1975).

. See 1 Am. Stock Ex. Guide (CCH) 1401-09 (1979) (U.S. Government notes, bonds and bills); 1 NYSE Guide (CCH) 899-57 to 60 (1981) (U.S. Government bonds and notes); PHLX Guide (CCH) 776 (1981) (GNMA securities).

. See Rules 120, 140, 2 Am. Stock Ex. Guide (CCH) HH 9270, 9288 (1981); Rules 62.10, 66, 2 NYSE Guide (CCH) HH 2062, 2066 (1978); Rules 150-54, PHLX Guide (CCH) HH 2150-54 (1977).

. For example, when the American Stock Exchange (“Amex”) recently wished to amend its rules in order to trade GNMA securities, it was required to submit the proposed rules changes to the SEC for review pursuant to section 19(b) of the SEA. The SEC approved the rules changes after finding them to be consistent with the requirements of the SEA, particularly section 6 and the rules and regulations thereunder. 44 Fed.Reg. 50,942 (1979). In 1977, when the Amex and the CBOE filed separate proposals for instituting options trading on Government debt securities, the SEC exercised its regulatory authority by determining not to approve such proposals until after completion of a special study of the options market which the SEC had undertaken. 42 Fed.Reg. 56,711 (1977). Although the SEC published notice of these 1977 proposals, 42 Fed.Reg. 2734 (1977) (Amex) and 42 Fed.Reg. 32,236 (1977) (CBOE), no comments were filed suggesting either that the SEC lacked jurisdiction to authorize options trading on Government debt securities on a national security exchange, or that such trading was subject to the jurisdiction of the CFTC.

. In Daniel, the interest at issue was an employee’s share in “a noncontributory compulsory pension plan,” 439 U.S. at 553, 99 S.Ct. at 793 while in Weaver, the disputed instruments were “a conventional certificate of deposit and a business agreement between two families.” - U.S. at -, 102 S.Ct. at 1220. The Supreme Court in Weaver expressly reemphasized the broad scope of the definition of “security” found in § 3(a)(10) of the SEA, and stated that the term “was meant to include ‘the many types of instruments that in our commercial world fall within the ordinary conception of a security.’ ” - U.S. at -, 102 S.Ct. at 1222 quoting H.R.Rep.No.85, 73d Cong., 1st Sess. 11 (1933). The Supreme Court in Weaver also reaffirmed its holding in SEC v. Howey, Inc., 328 U.S. 293, 299, 66 S.Ct. 1100, 1103, 90 L.Ed. 1244 (1974), that the definition of security “includes [not only] ordinary stocks and bonds, [but also] the ‘countless and various schemes’ devised by those who seek the use of the money of others in the promise of profits.” - U.S. at -, 102 S.Ct. at 1222. The Weaver Court concluded, however, that in the particular fact situation before it, see - U.S. at - n.11, 102 S.Ct. at 1225 n.ll, it was “unnecessary to subject issuers of bank certificates of deposit to liability under the federal securities laws since the holders of bank certificates of deposit are abundantly protected under the federal banking laws.” - U.S. at -, 102 S.Ct. at 1224.

. I understand there is some exchange trading of futures on bank certificates of deposit.

. CEA § 8a(5), 7 U.S.C.A. § 12a(5) (1980), gives the CFTC the authority “to make and promulgate such rules and regulations as, in the judgment of the Commission, are reasonably necessary to effectuate any of the provisions or to accomplish any of the purposes of this chapter.”

. 47 Fed.Reg. 7677, 7678 (Feb. 22, 1982) (emphasis added). Despite the CFTC’s express statement that Proposed Rule 34.1 “would remove any possibility that the prohibitions in Section 4(c) . . . would impede trading in options on exempted securities on national securities exchanges subject to regulation by the SEC,” 47 Fed.Reg. at 7678 n.2, the majority argues that the proposed CFTC rule, even if approved by Congress, would not lift the options ban. Ante at 1144 n.13. The apparent basis for this argument is the majority’s view that the proposed rule does not adequately “document the CFTC’s ability to regulate options on exempted securities.” Id. at 1144 n.13. In light of the extensive evidence documenting the SEC’s ability to regulate GNMA options trading, see note 13 supra, and the express provisions of the CEA directing the CFTC and the SEC to consult and cooperate on jurisdictional matters, see 7 U.S.C. § 4a(g)(2), the majority’s view represents an extremely crabbed interpretation of section 4c(c) — an interpretation that is strikingly at odds with the majority’s expansive notions of CFTC authority under other sections of the CEA.
In any event, the submission to Congress of CFTC Proposed Rule 34.1, in conjunction with the recent jurisdictional agreement reached between the SEC and the CFTC, raises serious mootness and standing problems in the instant case. See generally Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 37-39, 96 S.Ct. 1917, 1923-24, 48 L.Ed.2d 450 (1976); Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 2204-05, 45 L.Ed.2d 343 (1975). Although the CBOT has asserted standing both on its own and as representative of its members, it is difficult to understand how either the Board of Trade or its individual members will be injured by the SEC’s decision to authorize the trading of GNMA options on a totally independent securities exchange. Indeed, because the options pilot program recently enacted by the CFTC “is limited to options on commodity futures,” ante at 1144 n.13, quoting 46 Fed.Reg. 54,530 (Nov. 3, 1981), the CBOE and the CBOT would not even be competing for the same trading business. Cf. Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 152-53, 90 S.Ct. 827, 829, 25 L.Ed.2d 184 (1970). Moreover,
*1184Article V of the CBOE’s Certificate of Incorporation provides that all present and future members of the Board of Trade may become members of the CBOE without the purchase of a seat, and a number of Board of Trade members have exercised this right. Such a dual membership provision further reduces the already attenuated potential for injury to CBOT members resulting from the trading of GNMA options on the CBOE.
The majority’s citation of Hill v. Wallace, 259 U.S. 44, 61, 42 S.Ct. 453, 455, 66 L.Ed. 822 (1922), ante at 1140-1141 n.4, to support the standing of the Board of Trade is not persuasive. The statute challenged in Hill imposed a confiscatory tax of 20 cents a bushel on all grain futures contracts then traded on the Chicago Board of Trade. Plaintiffs in Hill (who did not include the Board of Trade itself) specifically alleged that “no member of the Board could afford to make contracts for future delivery and pay the tax thereon,” and that “the [challenged] law in effect prohibits all [Board of Trade members] from making any contracts of sale for future delivery.” 259 U.S. at 47, 42 S.Ct. at 454. The contrast between the direct and immediate injury alleged in Hill and the merely abstract potential for harm alleged by the Board of Trade in the instant case could hardly be more distinct.

. The CFTC’s regulatory authority is due to expire on September 30, 1982. 7 U.S.C.A. § 16(d) (1980). Currently, Congressional subcommittees in both the Senate and House are holding hearings to determine whether such authority should be renewed. Testimony given at these hearings has highlighted the CFTC’s present inability to effectively police abuses in the commodities industry. In light of these enforcement problems, several congressional witnesses, including the current Chairman of the CFTC, have suggested that the CEA’s exclusive jurisdiction proviso be modified to give state agencies and other federal authorities concurrent jurisdiction over the policing of commodities fraud. See Chicago Tribune, Feb. 24, 1982, § 2 (Business) at 1 (quoting testimony of CFTC Chairman Phillip Johnson and Senator William V. Roth, Jr.). Similar proposals have been endorsed by the General Accounting Office, Congress’ investigative arm, which recently completed a highly critical study of the CFTC. Id.

. Such a determination, of course, runs directly counter to the oft repeated pronouncements of both the Supreme Court and this circuit that the provisions of the SEA (including the definition of a security) are to be liberally construed in order to carry out the broad remedial purposes of the Securities Acts. See, e.g., Tcherepin v. Knight, 389 U.S. 332, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967); Canadian Imperial Bank of Commerce Trust Co. v. Fingland, 615 F.2d 465 (7th Cir. 1980); Goodman v. Epstein, 582 F.2d 388 (7th Cir. 1978), cert. denied, 440 U.S. 939, 99 S.Ct. 1289, 59 L.Ed.2d 499 (1979).