Release: #4243-99
For Release: March 16, 1999

CFTC ISSUES PROPOSED RULES CONCERNING ORDER ROUTING AND ELECTRONIC ACCESS TO FUTURES EXCHANGES OPERATING PRIMARILY OUTSIDE THE U.S.

Washington, D.C. The Commodity Futures Trading Commission (Commission) today proposed a new Rule 30.11 that would establish an exemption procedure under which exchanges operating primarily outside the U.S. could petition the Commission for orders that would permit electronic access to those exchanges from within the U.S. without requiring them to be designated as U.S. contract markets. The Commission's proposals would also allow U.S. customers to use order routing systems, including Internet-based systems, to enter orders on the exempt electronic exchanges, as well as on U.S. futures exchanges. The proposed rules set forth certain basic, minimum safety standards for the operation of these order routing systems. The proposed rules are based on the general framework that previously had been outlined by the Commission in a concept release published in the Federal Register (63 Fed. Reg. 39779, July 24, 1998).

The Commission's proposed rules are intended to create a flexible, open-ended framework for addressing the regulatory issues that arise from the advent of electronic trading and from the increasing globalization of futures markets. The Commission's proposals would provide a procedure for seeking an exemption from the contract market designation requirement and related requirements for boards of trade that have historically operated solely within countries other than the U.S., but that, as a result of a desire to take advantage of technological advancements, now wish to make their products accessible from within the U.S. via trading screens, the Internet, or other automated trading systems.

The Commission's proposals are designed to foster the growth of the global marketplace while allowing the Commission to fulfill its obligations under the Act to protect U.S. customers and to maintain the integrity and competitiveness of U.S. markets. The process set forth in the proposed rules would avoid duplicative regulation, would encourage other countries to allow electronic access to U.S. exchanges and would encourage global competition and open markets in the futures industry.

The proposed rules will be published shortly in the Federal Register. Public comment on the proposed rules must be received within 30 days of the date of publication in the Federal Register. Copies of the proposed rules may be obtained by contacting the Commission's Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or by accessing the Commission's website, www.cftc.gov.