CME DROPS S AND P 500 FUTURES PRICE LIMIT PLAN
The Chicago Mercantile Exchange's
board of the directors has decided to drop a proposal to place
a limit on daily price movements of its Standard and Poor's 500
futures contract, CME President William Brodsky said.
    Brodsky told the Futures Industry Association that the
exchange's board decided Tuesday to withdraw the proposal,
which aimed to quell price volatility in the popular contract.
    He said the proposal to establish a one-year pilot program
had generated much negative reaction among users of the
contract and that the CFTC "was not comfortable" with the plan.
    "Now, given the CFTC's posture on our filing, we feel the
negatives outweigh the positives," Brodsky said.
    Brodsky said market users were concerned that limits could
"become self-fulfilling because they could force sales to
(allow users to) avoid becoming locked into the market."
    He also said the board was concerned that the one-year
pilot price limit might become permanent. "Rules when put in
place sometimes don't come off," he said.
 Reuter
