CFTC Staff Issues Advisory on Options on Commodity ETFs

In an advisory on the clearing of options on various spot commodity-based exchange traded fund share products, CFTC Division of Clearing and Risk ("DCR") staff concluded that "it is substantially likely" that these products are securities and fall under SEC oversight, with no additional CFTC role.

The DCR said that (i) Spot Commodity ETF shares based on various precious metals have been listed and traded on national securities exchanges since 2004, (ii) Spot Commodity ETF shares based on bitcoin have been listed and traded on national securities exchanges with the SEC since 2024 and (iii) that recently Spot Commodity ETF shares on Ethereum were approved by the SEC in May 2024. (See previous coverage.)

The DCR concluded that Spot Commodity ETF shares would be held to be securities, and that it "believe[s] that these shares listed on SEC registered national securities exchanges do not implicate [CFTC] jurisdiction, and therefore, the clearing of these options by OCC would be undertaken in its capacity as a registered clearing agency subject to SEC oversight."