U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-5260 

Facsimile: (202) 418-5527

Division of 

Market Oversight

CFTC letter No. 06-08 

April 21, 2006 

No-Action 

Division of Market Oversight 

Dr. Ekkehard M. Jaskulla 

Director - Head of Section 

Legal Affairs and Membership 

Section Markets and Regulatory 

Eurex Deutschland 

Neue Borsenstrasse 1 

60485 Frankfurt/Main 

Germany 

 Re: Request for Amendment of No-Action Letter to Eurex Deutschland – CFTC Staff 

Letter No. 99-48 (August 10, 1999) 

Dear Mr. Jaskulla: 

 On August 10, 1999, the Division of Trading and Markets (T & M) of the Commodity 

Futures Trading Commission (Commission)issued a no-action letter1 in which it confirmed that 

it would not recommend that the Commission institute enforcement action against Eurex 

Deutschland (Eurex) or its members if current and future Eurex members installed additional 

Eurex electronic trading terminals in members’ offices located in the United States or if Eurex 

made available for trading certain additional contracts under the terms of the no-action letter 

issued to its predecessor, Deutsche Terminborse.2

 Specifically, T & M stated that it would not 

recommend that the Commission institute enforcement action against Eurex or its members 

solely based upon Eurex’s failure to obtain contract market designation pursuant to Sections 5 

and 5a of the Commodity Exchange Act (Act) if: (i) Eurex members use Eurex terminals located 

in the U.S. to trade for their proprietary accounts through the Eurex Trading System (System); 

(ii) Eurex members who are registered with the Commission as futures commission merchants 

(FCM) use Eurex terminals located in the U.S. to submit orders from U.S. customers for 

submission to the System; (iii) Eurex members who are registered with the Commission as 

FCMs or who are exempt from such registration pursuant to Rule 30.10 (Rule 30.10 firms) 

accept orders through U.S. automated order routing systems (AORS) from U.S. customers for 

submission to the System; and/or (iv) the additional contracts listed in the Eurex no-action letter 

were made available for trading through the System in the manner set forth in clauses (i), (ii), or 

(iii) above. On October 25, 2004, the Division of Market Oversight (Division) amended the 

 

1

 CFTC Staff Letter No. 99-48 (August 10, 1999) (Eurex no-action letter).

2

 CFTC Staff Letter No. 96-28 (February 29, 1996). 
Dr. Ekkehard M. Jaskulla 

Page 2 of 4 

Eurex no-action letter to reflect additional circumstances and arrangements relating to the 

agreement of Eurex Clearing AG and The Clearing Corporation to enter into a clearing link 

arrangement that was not applicable at the time of the issuance of the Eurex no-action letter.3

 By letter dated January 30, 2006, you requested an amendment to the above no-action 

relief to enable Eurex members that are U.S.-registered commodity pool operators (CPO) and 

commodity trading advisors (CTA), or firms that are exempt from such registration pursuant to 

Commission Rule 4.13 or 4.14, to enter orders directly into the System through terminals located 

in the United States on behalf of the pools which they operate or the customer accounts over 

which they exercise trading discretion, respectively, provided that an FCM or Rule 30.10 firm 

acts as clearing firm with respect to the trading activity of such CPO or CTA members.4

 You represent that CPOs and CTAs generally have sought to become exchange members 

in order to obtain a more favorable fee arrangement or to enjoy the trading immediacy made 

possible by direct access to an exchange’s electronic trade matching engine. Specifically, a 

number of U.S. CPOs and CTAs have expressed their interest in becoming trading members of 

Eurex and thereby be able to enter trades directly into the System. This would benefit the pools 

operated by the CPO and the U.S. customer accounts for which the CTA has trading discretion. 

 With respect to membership generally, you represent that Eurex has a single category of 

exchange membership, which is available to commercially organized business entities. An entity 

having a principal office outside of Germany may apply for membership, provided that it is 

subject to banking or exchange supervision in its home country and that its regulator has the 

authority to exchange information with the German regulatory authorities. A prospective Eurex 

member must demonstrate to Eurex that it is duly organized and appropriately licensed to do 

business in its home jurisdiction and is otherwise fit and proper to become a member of Eurex. 

Trading members must also meet minimum financial requirements. 

 In addition, trading members must have their positions guaranteed by a member of Eurex 

Clearing AG, unless they are themselves clearing members of the exchange. Eurex Clearing AG 

is itself a party to the guarantee between the clearing member and the trading member. Under 

this guarantee, all positions duly entered into by the trading member are guaranteed by the 

clearing member without limitation.5

 The Division has reviewed the requested amendment and its earlier no-action letter, as 

 

3

 CFTC Staff letter No. 04-31 (October 25, 2004). 

4

 The Division recently has issued no-action letters permitting, subject to conditions, CPO and CTA members of 

Euronext Amsterdam and NYMEX Europe Limited to enter orders through trading terminals located in the United 

States for the pools which they operate or the accounts over which they have discretionary authority, respectively. 

CFTC Staff Letters No. 05-16 (August 26, 2005) and No. 05-24 (December 16, 2005). 

5

 The approximately 90 members of Eurex Clearing AG are categorized as either direct clearing members 

(DCMs) or general clearing members (GCMs). Only GCMs may clear transactions on behalf of nonaffiliated nonclearing members. Credit institutions, banks, and other financial institutions that are regulated by a member country 

of the European Union or Switzerland may become clearing members (as can the branch offices of those entities if 

the branch office is comprehensively regulated by a European Union member state or Switzerland). GCMs must 

have at least €125 million (approximately $135 million) in regulatory equity capital. 
Dr. Ekkehard M. Jaskulla 

Page 3 of 4 

amended, and has determined that granting the amendment, subject to the condition below, 

should not have a significant impact on the no-action relief as granted and would not be contrary 

to public policy. Accordingly, the Division confirms that it will not recommend that the 

Commission institute enforcement action against Eurex or its members solely based upon 

Eurex’s failure to seek designation as a contract market or registration as a derivatives 

transaction execution facility under Sections 5 and 5a of the Act6

 if Eurex members who are 

registered with the CFTC as CPOs or CTAs, or who are exempt from such CPO or CTA 

registration pursuant to Commission Regulation 4.13 or 4.14, and who wish to submit orders on 

behalf of U.S. pools they operate or U.S. customer accounts for which they have discretionary 

authority, respectively, use Eurex terminals located in the U.S. for transmission of such orders to 

the System, provided that an FCM or Rule 30.10 Firm acts as clearing firm with respect to all 

activity conducted by such CPOs and CTAs through the submission of orders on the System. 

This no-action position is subject to compliance with the following condition: 

All orders that are transmitted through the System by a member of Eurex that is operating 

pursuant to the no-action relief provided herein will be solely for the member’s own account 

unless (i) such member is registered with the CFTC as an FCM or is a Rule 30.10 Firm, or (ii) 

such member is registered with the CFTC as a CPO or CTA, or is exempt from such registration 

pursuant to Commission Regulation 4.13 or 4.14, provided that an FCM or Rule 30.10 Firm acts 

as clearing firm with respect to all activity conducted by such CPO or CTA through the 

submission of orders on the System.7

Except as stated herein, the Division notes that its no-action position does not relieve 

Eurex from compliance with the terms and conditions set forth in the Eurex no-action letter. As 

with all no-action letters, the Division retains the authority to condition further, modify, suspend, 

terminate, or otherwise restrict the terms of the no-action relief provided herein, in its discretion. 

The Division specifically notes that its no-action position does not alter the general requirement 

that a firm operating pursuant to the no-action relief provided herein must be appropriately 

registered or exempt from such registration to engage in the offer or sale of a foreign futures 

contract or a foreign option transaction for or on behalf of a United States customer. 

The no-action position taken herein is taken by the Division only and does not necessarily 

reflect the views of the Commission or any other unit or member of the Commission’s staff. It is 

based upon the information and representations contained in Eurex’s request for no-action relief 

and the amendment thereto. Any materially different, changed, or omitted facts or circumstances 

may render this letter void. In addition, please be advised that the Commission is currently 

evaluating the no-action process in order to determine if that process should continue to be used 

in addressing requests for making foreign board of trade contracts directly accessible from the 

 

6

 The Eurex no-action letter referred only to contract market designation because at that time there was no 

provision in the Act or rules thereunder governing a derivatives transaction execution facility. Because of the 

creation of that category of board of trade under the Commodity Futures Modernization Act, the Division amended 

its relief accordingly. 

7

 This supersedes the following condition enumerated in the Eurex no-action letter: All orders that are 

transmitted through the System by a member of Eurex that is operating pursuant to the no-action relief provided 

herein and that is not registered with the Commission as an FCM or that is not a Rule 30.10 Firm will be solely for 

the “proprietary accounts” of such Eurex member. 
Dr. Ekkehard M. Jaskulla 

Page 4 of 4 

U.S. As the Division emphasized in the Eurex no-action letter, the no-action position set forth 

therein is intended to provide immediate, interim relief to Eurex and its members pending any 

adoption of rules or guidelines by the Commission regarding the use and placement in the U.S. 

of automated trading systems or AORSs that provide access to the products of foreign boards of 

trade. Thus, the no-action letter will cease to be effective in the event that the Commission or its 

staff adopts generally applicable rules or general guidelines regarding the issues addressed by the 

no-action relief, and Eurex will be subject to those rules or guidelines. 

 If you have any questions regarding this correspondence, please contact Duane C. 

Andresen, Special Counsel, Division of Market Oversight, at (202) 418-5492. 

 Very truly yours, 

 Richard A. Shilts 

 Director 

cc: Julius Seiffert, Legal Counsel, Eurex Deutschland 

 Gregory C. Prusik, Vice-President, Compliance and Registration, NFA 

Branch Chief, Audit and Financial Review Unit, Division of Clearing and Intermediary 

Oversight, Chicago Regional Office