For Release: January 16, 2008
CFTC Proposes to Expand Registration Exemption for Foreign-Based Intermediaries
Washington, DC - The Commodity Futures Trading Commission (CFTC) has proposed Regulation 3.10(c)(4) that would permit certain foreign firms to introduce institutional U.S. customers to registered Futures Commission Merchants (FCMs) in connection with trading on U.S. exchanges, without having to register as an introducing broker (IB).
The IB registration exemption would be limited to those foreign firms that are affiliated with a registered FCM and that have already obtained exemptive relief from the Commission pursuant to Regulation 30.10. The exempt foreign affiliate would not be permitted to solicit any U.S. customers for trading on U.S. markets nor handle any U.S. customer funds for trading on U.S. markets. In addition, any participating FCM would be required to acknowledge that it would be jointly and severally liable for any violations of the Commodity Exchange Act or the Commission’s regulations committed by the foreign affiliate in connection with those activities, even if another FCM ultimately submitted the trade for clearing.
The Commission recently adopted amendments to Regulation 3.10(c) to provide an exemption from registration to any foreign person acting in the capacity as an FCM, IB, commodity trading advisor or commodity pool operator provided that: (1) it limits its customers to persons located outside the U.S.; and (2) all transactions executed on U.S. exchanges are submitted for clearing on an omnibus basis through a registered FCM. (See CFTC Press Release 5413-07, November 14, 2007.)
The proposed Regulation 3.10(c)(4) will be published shortly in the Federal Register. Public comment on the proposed regulation must be received within 30 days of the date of publication in the Federal Register. Copies of the proposed 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: January 16, 2008