The CFTC receives many inquiries regarding what foreign futures and options contracts may be offered or sold to customers located in the U.S. and what registration requirements are applicable to intermediaries who offer and sell those products.
In general, the Commodity Exchange Act (CEA) and CFTC regulations do not restrict the offer or sale of foreign exchange-traded futures and commodity option products to customers located in the U.S. (61 Fed. Reg.10891). Special procedures do apply, however, to the offer or sale of security index and foreign government debt products. These procedures are outlined below. Please note that these procedures do not apply to foreign exchange-traded security futures products, including futures or futures options on narrow-based security indices, as defined in Section 1a(35) of the CEA. Foreign exchange-traded security futures products generally may only be offered or sold to certain sophisticated customers located in the U.S. pursuant to an Order issued by the U.S. Securities and Exchange Commission (SEC) and an Advisory issued by the CFTC’s Division of Clearing and Intermediary Oversight (DCIO). (See CEA Section 2(a)(1)(E) and CEA Section 2(a)(1)(F)).
Please note that the offer and sale of any foreign futures or options contract to a customer located in the U.S., including those products subject to the special procedures described below, is subject to the requirements applicable to intermediaries set forth in Part 30 of the CFTC's regulations. In particular, CFTC Regulation 30.4 requires an intermediary seeking to act on behalf of a U.S. customer for the purpose of trading foreign futures or options to register in the appropriate capacity with the CFTC (i.e., FCM, IB, CTA or CPO), or apply for an exemption from registration. This registration requirement applies to all intermediaries, regardless of where they are located. So, for example, a foreign firm that clears foreign futures trades on a fully-disclosed basis on behalf of a customer located in the U.S., must register as an FCM or obtain an exemption from FCM registration pursuant to CFTC Regulation 30.10. Any firm located outside the U.S. acting in the capacity of an IB, CTA or CPO may apply for an exemption pursuant to CFTC Regulation 30.5. For more information on the registration exemptions available under Part 30 of the CFTC’s regulations, see Offer and Sale of Foreign Products to U.S. Customers.
Notwithstanding the foregoing product-based and intermediaries-based requirements, the offer and sale of foreign futures and options to customers located in the U.S., including those products subject to the special procedures described below, remains subject to the applicable laws and regulations in the foreign jurisdiction in which the listing exchange is located. Although U.S. customers may be permitted under the CEA to buy or sell a particular product, foreign law or regulations may not permit such activity to occur. For example, the law of a particular foreign jurisdiction may not allow a U.S. FCM either to become a clearing member on the foreign exchange or establish an omnibus account with a clearing member on that exchange. In these circumstances, a U.S. customer would not be able to buy or sell the foreign product, unless appropriate relief has been granted to the foreign regulator or the exchange pursuant to CFTC Regulation 30.10.
Foreign exchange-traded security futures products (futures or futures options on narrow-based security indices or single securities): Foreign exchange-traded security futures products may be offered or sold in the United States subject to certain conditions set out in the SEC Order and the DCIO Advisory.
Foreign government debt obligations: Debt obligations of a foreign government must be designated as an exempted security by the U.S. Securities and Exchange Commission under SEC Rule 3a12-8 before a futures contract or option thereon can be offered or sold in the United States. Government debt instruments issued by the following countries have been designated by the SEC as exempted securities: United Kingdom, Canada, Japan, Australia, France, New Zealand, Austria, Denmark, Finland, the Netherlands, Switzerland, Germany, Italy, Ireland, Spain, Mexico, Brazil, Argentina, Venezuela, Belgium, and Sweden. See 17 CFR 240.3a12-8. Please contact the SEC’s Division of Trading and Markets at 202-551-5777 or firstname.lastname@example.org for further information.
Exception for sales to customers located outside the United States: The product requirements and restrictions may not apply to registered futures commission merchants (FCMs), introducing brokers (IBs), and commodity trading advisors (CTAs) in offering and selling (or providing advice with respect to) certain foreign exchange-traded products to customers located outside the United States.
For information on foreign security index or sovereign debt products not covered here and on how to qualify such contracts or products for sale in the United States, contact the CFTC’s Division of Market Oversight.