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CFTC Staff Reaffirms US Rules for Foreign Boards of Trade

"By reaffirming the CFTC's longstanding approach to provide U.S. traders with choice and access to the deepest and most liquid global markets, with a wide range of products and asset classes, American companies that were forced to set up shop in foreign jurisdictions to facilitate crypto asset trading now have a path back to U.S. markets."
Caroline D. Pham, CFTC Chair
"By reaffirming the CFTC's longstanding approach to provide U.S. traders with choice and access to the deepest and most liquid global markets, with a wide range of products and asset classes, American companies that were forced to set up shop in foreign jurisdictions to facilitate crypto asset trading now have a path back to U.S. markets."
Caroline D. Pham, CFTC Chair

The CFTC Division of Market Oversight reaffirmed that foreign boards of trade ("FBOTs") must register with the agency ("CFTC Rules Part 48 Registration of Foreign Boards of Trade") before providing direct access to US-based members or other US persons.

In its advisory the Division outlined the requirements for FBOT registration. The Division said that foreign exchanges must show that they were established and organized markets, maintained rules against abusive trading, enforced protections for market integrity, operated under authorization in their home country and were subject to ongoing oversight by a regulator that could share information with the CFTC. The Division said that domestic boards of trade continued to fall under the designated contract market ("DCM") framework in CEA Section 5 ("Designation of boards of trade as contract markets").

The Division also clarified that registered FBOTs did not need to become DCMs to provide direct access to US participants. The Division stated, however, that access must be restricted to categories such as proprietary traders, futures commission merchants, and in some cases commodity pool operators, commodity trading advisors and introducing brokers.

Primary Sources

  1. CFTC: Press Release: Acting Chairman Pham Announces FBOT Advisory to Provide Regulatory Clarity for Non-U.S. Exchanges
  2. CFTC: Staff Letter No. 25-27: Registration Framework for Foreign Boards of Trade Providing Direct Access to Members or Other Participants Located in the United States

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Tags

Regulated Activities
Registration Requirement
Regulated Entities
Markets
Sub-Entity
FBOTs
Body of Law
CEA Regulation
Jurisdiction
US - Federal
Organization
CFTC, NFA, CFTC Markets
Sub-Author
CFTC