Regulation of Hybrid Instruments Under the Commodity Exchange Act: A Call for Alternatives

Monday, January 1st, 1990 at 12:00 am by Jerry W. Markham
Jerry W. Markham, Regulation of Hybrid Instruments Under the Commodity Exchange Act: A Call for Alternatives, 1990 Colum. Bus. L. Rev. 1

This article examines the CFTC’s treatment of hybrid instruments. It argues that the current regulations are too restrictive: they hamper innovation, restrict competition to the trading exchanges, and are unnecessary in light of alternative regulatory schemes and in light of the CFTC’s limited role in protecting public investors. This article argues instead that the CFTC or Congress should permit large institutions and sophisticated investors to trade hybrid commodity instruments without being subject to CFTC regulations. The article will first examine the scope of the CEA as traditionally and recently applied, and then it will review several hybrid products that have been developed to date. Finally, the article analyzes the CFTC’s rule making efforts and suggests areas that need to be expanded to allow the continued development of hybrid instruments.

Author Information

Partner, Rogers & Wells, Washington, D.C.; Adjunct Professor, Georgetown University Law Center. B.S. 1969, Western Kentucky University; J.D. 1971, University of Kentucky; LL.M. 1974, Georgetown University.