speculator,
SSF's have been trading overseas and are doing quite well in Europe while to date they have been pretty much a failure in Asia & Australia. As the commodity exchanges around the world demutualize they naturally have an incentive to offer products that they believe will increase revenues. In Asia, I believe the products are not doing well due to poor marketing by the exchanges and a reluctance of brokers to both offer the products to their clients or make markets. The reluctance of offering to their clients is due to commissions (SSF's are cheaper) and the reluctance to make markets goes along the same lines - why support liquidity in a market that you do not want to be successful.
In Europe, there was a great deal of publicity and support from the traditional market making/trading firms. There are also a number of direct access futures brokers that are promoting the products which have lead to their success. Benefits - lower commissions, no stamp tax (as high as 50 bps in some markets), more leverage which is not necessarily evil.
As I mentioned in another post, the above benefits are not as great in the states. You can get 4:1 margin on stocks, commissions are cheap and there is no stamp tax. Ofcourse, clearing, corporate actions, and other back office issues are a bit easier in the futures world vs. the physical delivery world. However, you do have many firms such as the one I work for (Timber Hill/IB) which most likely will provide liquidity by providing fair markets and access. I would assume anyone trying to manipulate a stock via SSF's will quickly get arbed back into line.
In any event, it is my belief that additional derivative products can actually lead to a decrease in volatility and an increase in volumes. I have no idea if they will succeed but market forces should decide - not the regulators who have the ability to choose whether or not they can be offered.
