CFTC Staff Grants No-Action Relief to Foreign Exchange

The CFTC Division of Market Oversight ("DMO") granted no-action relief to Korea Exchange, Inc., ("KRX") to permit the sale of futures contracts linked to the Korea Composite Stock Price Index ("KOSPI") 200 as it transitions to a CFTC-classified futures index.

The letter comes in response to concerns that the KOSPI 200 repeatedly shifted between a narrow-based classification (subject to both SEC and CFTC jurisdiction) to a broad-based classification (governed by the CFTC only). For purposes of the letter, futures on narrow-based security indices may only be sold to qualified institutional buyers ("QIBs"), whereas QIB status is not required for futures sales on broad-based security indices.

The DMO provided relief during the transition period to allow continued trading of KOSPI 200 futures by QIBs until the CFTC certifies the index as broad-based under CFTC Regulation 30.13 ("Commission certification").

The relief is conditioned on KRX (i) submitting a materially complete request for certification on February 6, 2025, (ii) cooperating with the CFTC throughout the review process and (iii) complying with all provisions of CFTC Regulation 30.13 during the certification review. The relief applies to all contract months listed before or after the effective date. It remains in place until the earliest of (i) certification, termination, or denial of the request for certification or (ii) March 6, 2026.