Court Gives CFTC Power Over Index Participations

The Supreme Court on Monday allowed the Commodity Futures Trading Commission to regulate a type of stock market investment called an index participation.

The court, without comment, left intact an appeals court ruling that gave the CFTC, rather than the Securities and Exchange Commission, such regulatory power.

An index participation is a contract of indefinite duration based on the value of a group of securities. The contract resembles a basket of stocks because its value is tied to a broad stock-market index, such as the Standard & Poor’s 500 index.

The appeals court held that such products come under the CFTC’s supervision if they have any element of a futures contract.

The SEC generally regulates securities, and the CFTC has jurisdiction over futures contracts.