CFTC Votes to Allow 2 New Index Futures

The Commodity Futures Trading Commission on Wednesday approved new stock-index futures contracts for the first time since the October stock market crash.

The commission voted unanimously to permit the Chicago Board of Trade to trade contracts based on the Chicago Board of Options Exchange 250 stock index and the CBOE 50 stock index.

The action came only a day after five big Wall Street firms announced that customer concerns about stock market volatility had prompted them to stop for their own accounts a form of futures trading known as index arbitrage.

In index arbitrage, pension funds, mutual funds and other institutional investors use computers to profit from momentary price discrepancies between the stock and futures markets by simultaneously buying in one market and selling in the other.

The Securities and Exchange Commission, which governs the stock market, has blamed index arbitrage for accelerating the Oct. 19 stock market crash and for the continuing vulnerability of the market to wild price swings.