For Release: November 14, 2007
CFTC Adopts Limited Registration Exemption for Foreign-Based Intermediaries
Washington, DC – The Commodity Futures Trading Commission (CFTC) has adopted regulatory amendments that codify its longstanding policy towards foreign brokers. The amendments provide greater legal certainty to commodity activities undertaken on U.S. markets by persons located outside the U.S.
Specifically, the Commission has determined to exempt foreign firms from registration as a futures commission merchant (FCM) and any associated requirements, if they limit their customers to persons located outside the U.S. and submit transactions executed on U.S. exchanges for clearing on an omnibus basis through a registered FCM. However, any foreign broker operating under this exemption will remain subject to existing provisions that apply to the activities of a foreign broker, such as the large trader reporting requirements, as well as those provisions of the Commodity Exchange Act and Commission regulations that prohibit fraud or manipulation by a foreign broker.
In response to comments, the Commission also amended Regulation 3.10(c) to codify a registration exemption for any foreign person functioning as an introducing broker, commodity pool operator or commodity trading advisor solely on behalf of customers located outside the U.S., if all commodity interest transactions are submitted for clearing to a registered FCM. In addition, the Commission amended Regulation 3.12 to codify a registration exemption for any individual located in the branch office of a Commission registrant that does not solicit or accept orders from customers located in the U.S.
The amended regulations will be published shortly in the Federal Register and will become effective 30 days after publication. Copies of the amended regulations may be obtained by contacting the Commission’s Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC, 20581, 202-418-5100, or by accessing the Commission’s website, www.cftc.gov.
R. David Gary
Last Updated: November 14, 2007