Trading and Markets Division Director Highlights CFTC-SEC Cooperation

Jamie Selway, Director of the SEC's Division of Trading and Markets, highlighted the agency's efforts to harmonize SEC and CFTC rulebooks and jointly develop a framework to list and trade tokenized securities.

At the Piper Sandler Global Exchange & Fintech Conference, Mr. Selway described priority workstreams including (i) developing a framework for tokenized securities, (ii) facilitating the transition to 23×5 equity market operation by year-end, and (iii) modernizing legacy rules such as Regulation NMS and the Consolidated Audit Trail. He said the agencies are also jointly evaluating gaps in compatibility across swap data reporting, portfolio margining, and product definitions - and are actively soliciting industry input on each.

Mr. Selway noted several cooperative actions that are underway. The SEC approved Nasdaq PHLX's cash-settled Bitcoin index options in May and issued a notice on CME's single-stock futures application in February. The CFTC also approved Kalshi's perpetual futures on Bitcoin as a futures contract - though he said - classification of perpetual futures on other underlying assets will proceed case by case, leaving a significant open question for digital asset market participants to monitor.

Mr. Selway drew firm lines around two investor-protection principles: maintaining a clear distinction between investing and gambling, and avoiding the extension of excessive leverage to retail investors. He said firms seeking to benefit from the harmonization process are cautioned that venue shopping and regulatory arbitrage between the two agencies will undermine the effort - and their standing with both regulators. He recommended that those with digital asset products, derivatives exposure, or equity market infrastructure should treat the current comment period as an opportunity to engage and shape the rules now taking form.