On December 21, 2000, President Clinton signed into law the Commodity Futures Modernization Act of 2000 ("CFMA"). This act repealed the 1982 Shad-Johnson Accord, and for the first time permitted the trading of futures on narrowly-based indices and single stocks, together known as security futures, or Single Stock Futures ("SSFs"). These new products are a hybrid of the traditional categories of "securities" and "futures." With the enactment of the CFMA, both U.S. securities and futures exchanges for the first time are eligible to trade SSFs.

Because single stock futures don't easily fit into either of the pre-existing categories, the CFMA directed that these products be treated as both "securities" and "futures." For the first time in the United States, we have a traded financial instrument subject to the joint regulation of both the Securities and Exchange Commission ("SEC") and the Commodity Futures Trading Commission ("CFTC"). Further, any firm wishing to sell SSFs will need to be registered simultaneously as a broker-dealer ("B/D") with the SEC and as a futures commission merchant ("FCM") with the CFTC.

The Nasdaq and the London International Financial Futures and Options Exchange ("LIFFE") formed a partnership to develop a new SSF marketplace. This joint venture was called Nasdaq Liffe Markets, LLC ("NQLX"). In June of 2003 Euronext.liffe announced that it was taking over sole ownership of NQLX. All trading on NQLX is done electronically.

The Chicago Board Options Exchange ("CBOE"), the Chicago Mercantile Exchange ("CME"), and the Chicago Board of Trade ("CBOT") have formed a joint venture to create a new electronic marketplace for the trading of SSFs. This joint venture is called OneChicago, LLC.

The American Stock Exchange ("AMEX") has announced its intention to list and trade SSFs.

Island ECN, Inc. has announced a subsidiary, Island Futures, that will list and trades SSFs.

This short list of existing and proposed SSF marketplaces is likely to grow, especially once the new product is established in the U.S.

Products similar to Single Stock Futures have been traded globally for some time in the following countries:

• Australia
• Canada
• Finland
• Hong Kong
• Spain
• Sweden
• United Kingdom

These products have not been generally available to U.S. investors with U. S. securities or futures trading accounts. Volume and open interest in these countries have steadily increased, and should continue to grow as more contracts are listed on existing and future international exchanges.

As trading in SSFs is off to a solid start in other parts of the world, there is an apparent demand among global investors for such products. How will SSFs be received in the United States? The consensus among many is that American investors will find a place in their portfolios for this new investment tool.

The United States has the most sophisticated and liquid equity markets in the world. While there are approximately 750,000 futures accounts in the U.S., and over 5,000,000 options accounts, industry studies indicate there are some 27,000,000 stock accounts. There is therefore a large customer base here for equity-based products. The success of these new products, and the growth of the futures industry in general, will come from individual investors becoming more aware of the advantages of futures trading, and having products that meet their needs.

Will success of the Single Stock Futures market drain customers away from equity markets? This is not anticipated. For one thing, many investors who will utilize SSFs will trade them in conjunction with underlying stock purchases or sales. For this reason, a successful launch of SSFs in this country is expected to result in an even more efficient and liquid equity marketplace. In fact, introduction of other derivative products in the past have led to increased liquidity in their underlying markets. When broad-based equity index futures and options were introduced, actual share volumes increased. The same phenomenon occurred when futures on U.S. Treasury Bonds, Bills and Notes were listed and traded.