DC Court Recharacterizes Futures Contracts into Security Futures

August 17, 2023

On July 28, 2023, in Cboe Futures Exchange, LLC v. Securities and Exchange Commission, the United States Court of Appeals for the District of Columbia (the “Court”)  issued an order vacating an exemptive order granted by the Securities and Exchange Commission (“SEC”) in November 2020 that provided exemptive relief to the Minneapolis Grain Exchange, Inc. (“MGEX”) in respect of its listing of SPIKES Volatility Index Futures (the “SEC Exemptive Order”).  This decision is remarkable in that the Court does not afford the usual regulatory deference to the SEC and further explains that substantively the SPIKES volatility product should be treated as “security futures” and not as a “futures” product essentially concluding that “futures” products afford less protection to investors than do “security futures.” 

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