CFTC Grants Exemption for Fully Collateralized Options

The CFTC Divisions of Market Oversight and Clearing and Risk granted the request of a designated contract market, registered as a derivatives clearing organization, for no-action relief from certain swap reporting and recordkeeping requirements on fully collateralized "binary options" transactions.  

The Divisions granted the relief under CFTC Rules 38.8(b) ("Listing of swaps on a designated contract market"), 38.10 ("Reporting of swaps traded on a designated contract market"), and 39.20(b)(2) ("Recordkeeping") and certain provisions under CFTC Rule 38.951 ("Additional sources for compliance"), as well as Parts 43 ("Real-Time Public Reporting") and 45 ("Swap Data Recordkeeping and Reporting Requirements").

The relief was subject to the following conditions:

• The contracts must be fully collateralized.
• The DCO must promptly publish the trade, time, quantity and price of each transaction on its website.
• The DCO must submit to the CFTC all transactional information as required under CFTC Rule 16.02 ("Daily trade and supporting data reports").
• The DCO must clear all contracts. 
• The DCO must maintain all records required under all other CFTC and CEA swap reporting and recordkeeping regulations such that they are available for inspection upon request by interested US regulators.