The new Amex Commodity Exchange, an affiliate of the American Stock Exchange, plans to proceed with plans to trade financial futures contracts while it awaits a decision on whether commodity options may be traded on domestic exchanges.
During hearings on the reauthoriaztion of the Commodity Futures Trading Commission this week, both the General Accounting Office and investigators for the House Appropriations Committee recommended that all commodity option trading - foreign and domestic - be banned until the CFTC proves that it is capable of regulating another market sector. A reauthorization bill proposed by Sen. Walter (Dee) Huddleston (D-Ky.),also provides for a ban, just on London option sales.
"I think we always have anticipated delays in the startup of the program," said a senior ACE official in New York yesterday, "and that is one of the reasons for filing our first contract application for GNMA futures" rather than commodity options.
GNMA futures contracts are based on pass-through certificates issued by the Government National Mortgage Association.Other financial futures now traded on the Chicago Mercantile Exchange are Treasury bonds, Treasury bills and commercial paper.
The ACE official said the new exchange, which was created partly to take advantage of the potential for commodity options trading, would attempt "to bring in additional financial futures...even in the face of continued delays" on options.
He added, however, that it is unlikely that ACE will proceed with its plans to start spot or physical markets in gold and silver bullion next month. Those contract designations were to be requested solely as a basis for options contracts on the metals.
In nothing that the CFTC is proceeding with its requests for supplemental funds for both fiscal 1978 and 1979 to operate a domestic options program, the House Appropriations report commented, "At this point, it appears that the agency and the Congress should take a long, hard, second look at the whole program."
The study added that the CFTC should heed the advice of the committee concerning new agencies, "...those which have expanded prudently have been much more successful in the long run than those that have been too impetuous."