CFTC Provides Temporary Relief for Foreign Brokers Acting as IBs

The CFTC Division of Swap Dealer and Intermediary Oversight ("DSIO") provided temporary exemptive relief to non-U.S. introducing brokers ("IBs") that temporarily fail to register with the CFTC. The DSIO stated that the relief is aimed at helping U.S. futures commission merchants maintain effective and efficient services for clients during the pandemic. The relief is valid until September 30, 2020.

The DSIO no-action letter was in response to a request by the Futures Industry Association for targeted regulatory relief for brokers exempt from registering as IBs under CFTC Rule 30.5 (a/k/a "Rule 30.5 Foreign Brokers"). The DSIO is allowing Rule 30.5 Foreign Brokers to accept orders from U.S. institutional entities to execute transactions on U.S. contract markets, if an affiliated CFTC-registered futures commission merchant is unable to complete the order flow due to a pandemic-related disruption in its operations. The DSIO stated that it will not take enforcement action against a Rule 30.5 Foreign Broker for failing to register with the CFTC as an IB, pending certain conditions.

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