[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR41.22]

[Page 464-465]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 41_SECURITY FUTURES PRODUCTS--Table of Contents
 
   Subpart C_Requirements and Standards for Listing Security Futures 
                                Products
 
Sec.  41.22  Required certifications.

    It shall be unlawful for a designated contract market or registered 
derivatives transaction execution facility to list for trading or 
execution a security futures product unless the designated contract 
market or registered derivatives transaction execution facility has 
provided the Commission with a certification that the specific security 
futures product or products and the designated contract market or 
registered derivatives transaction execution facility meet, as 
applicable, the following criteria:
    (a) The underlying security or securities satisfy the requirements 
of Sec.  41.21;
    (b) If the security futures product is not cash settled, 
arrangements are in place with a clearing agency registered pursuant to 
section 17A of the Securities Exchange Act of 1934 for the payment and 
delivery of the securities underlying the security futures product;
    (c) Common clearing. [Reserved]
    (d) Only futures commission merchants, introducing brokers, 
commodity trading advisors, commodity pool operators or associated 
persons subject to suitability rules comparable to those of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 and the rules and regulations 
thereunder, except to the extent otherwise permitted under the 
Securities Exchange Act of 1934 and the rules and regulations 
thereunder, may solicit, accept any order for, or otherwise deal in any 
transaction in or in connection with security futures products;
    (e) If the board of trade is a designated contract market pursuant 
to section 5 of the Act or is a registered derivatives transaction 
execution facility pursuant to section 5a of the Act, dual trading in 
these security futures products is restricted in accordance with Sec.  
41.27;
    (f) Trading in the security futures products is not readily 
susceptible to manipulation of the price of such security futures 
product, nor to causing or being used in the manipulation of the price 
of any underlying security, option on such security, or option on a 
group or index including such securities, consistent with the conditions 
for trading of Sec.  41.25;
    (g) Procedures are in place for coordinated surveillance among the 
board of trade, any market on which any security underlying a security 
futures product is traded, and other markets on which any related 
security is traded to detect manipulation and insider trading. A board 
of trade that is an alternative trading system does not need to make 
this certification, provided that:
    (1) The alternative trading system is a member of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 or national securities exchange 
registered pursuant to section 6(a) of the Securities Exchange Act of 
1934; and
    (2) The national securities association or national securities 
exchange of which the alternative trading system is a member has in 
place such procedures;
    (h) An audit trail is in place to facilitate coordinated 
surveillance among the board of trade, any market on which any security 
underlying a security futures product is traded, and any market on which 
any related security is traded. A board of trade that is an alternative 
trading system does not need to make this certification, provided that:
    (1) The alternative trading system is a member of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 or national securities exchange 
registered pursuant to section 6(a) of the Securities Exchange Act of 
1934; and
    (2) The national securities association or national securities 
exchange of which the alternative trading system is a member has in 
place such procedures;
    (i) Procedures are in place to coordinate regulatory trading halts 
between the board of trade and markets on which any security underlying 
the security futures product is traded and other markets on which any 
related security is traded. A board of trade that is an alternative 
trading system does not need to make this certification, provided that:
    (1) The alternative trading system is a member of a national 
securities association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 or national securities exchange

[[Page 465]]

registered pursuant to section 6(a) of the Securities Exchange Act of 
1934; and
    (2) The national securities association or national securities 
exchange of which the alternative trading system is a member has in 
place such procedures; and
    (j) The margin requirements for the security futures product will 
comply with the provisions specified in Sec.  41.43 through Sec.  41.48.