D.C. Circuit reverses SEC ruling on SPIKES futures, calls it “arbitrary and capricious”

The U.S. Securities and Exchange Commission (SEC) suffered another setback on July 28 as the D.C. Circuit overturned a ruling by the regulator ordering that SPIKES Index securities should be treated as ‘futures’ rather than as ‘securities futures’. The judge panel called the SEC order “arbitrary and capricious.”

The decision relates to an order from 2020, in which the SEC exempted SPIKES Index — a stock volatility index — from the definition of security futures, thus eliminating heavy taxes and other regulatory requirements attached to the term ‘security’. The relief, according to the SEC, was intended to promote competition among volatility indexes.

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