Commodity Futures Trading Commission 

 Office of Public Affairs 

 Three Lafayette Centre 

 1155 21st Street, NW 

 Washington, DC 20581 

 www.cftc.gov

Proposed Rules Regarding the Registration of Foreign Boards of Trade 

The Commodity Futures Trading Commission (CFTC or Commission) will consider for publication in the Federal 

Register proposed rules which will create a registration system for Foreign Boards of Trade (FBOT). The proposed 

rules implement provisions of the Commodity Exchange Act (CEA or Act), as amended by the Dodd-Frank Wall 

Street Reform and Consumer Protection Act (Dodd-Frank Act).

On July 21, 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection 

Act. Among other things, the Dodd-Frank Act further amended the CEA to: 

• Permit the CFTC to issue rules requiring registration and prescribing registration procedures for FBOTs seeking to 

provide direct access to their trading systems from the United States. Section 738 of the Dodd-Frank Act specifically 

amends § 4(b) of the CEA and provides authority upon which the Commission may adopt rules implementing a 

registration system for those FBOTs. In doing so, the Commission is to consider whether the FBOT is subject to 

comparable, comprehensive supervision and regulation by the appropriate governmental authorities in the FBOT’s 

home country. 

• Define “direct access” as an explicit grant of authority by an FBOT to an identified member or other participant 

located in the United States to enter trades directly into the trade matching system of the FBOT. 

The proposed FBOT registration system will replace the existing staff no-action process 

The proposed FBOT registration system would replace the existing staff-issued direct access no-action letters traditionally 

relied upon by FBOTs providing direct access from the United States. Many of the proposed requirements for and conditions 

applied to FBOT registration would be based upon those applicable to FBOTs currently granted no-action relief. These 

requirements and conditions have been developed through experience gained from reviewing applications for and issuing staff 

no-action letters. For instance, in determining whether to register the FBOT, the CFTC would evaluate whether the FBOT’s 

home regulatory authority oversees the FBOT in a manner that is comparable to the CFTC’s oversight of DCMs; specifically, 

whether the FBOT’s regulator supports and enforces regulatory objectives that are substantially equivalent to those supported 

and enforced by the CFTC, such as prevention of market manipulation and customer and market abuse.

Registration would be required for new FBOTs and FBOTs operating under an existing no-action 

letter 

The proposed regulations would apply to any registered FBOT, initially and on an ongoing basis, that wants to provide its 

identified members or other participants located in the U.S. with direct access to its trading system. It provides that it would 

be unlawful for an FBOT to permit direct access unless the Commission has issued it an Order of Registration. Further, it 

would be unlawful for an FBOT to make false or misleading statements in connection with any application for registration. 

The proposal describes how and where to apply for registration, and provides a “limited” registration application process for 

those FBOTs that are currently relying on staff-issued direct access no-action relief letters. 

The proposed FBOT application process and registration conditions 

The proposal describes the requirements that the FBOT would be required to meet in order to be registered. The 

requirements are divided into the same seven general categories currently evaluated by staff during the course of a review of an 

application for no-action relief: membership criteria, trading system, contracts, settlement and clearing, regulatory authorities, 

Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080 
Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080 

rules and rule enforcement, and information sharing. Whether they are successfully met would be determined by review of the 

information submitted by the applicant and a staff due diligence on-site visit to the FBOT and clearing organization. The 

proposal also details the conditions that a registered FBOT must meet to retain its registration, including general conditions;

real time, quarterly and annual reporting obligations; and conditions that apply to linked contracts. The linked contract 

conditions include those identified in the Dodd-Frank Act and those derived from Commission staff experience in issuing noaction relief letters. 

The proposal identifies the types of entities to which a registered FBOT could grant direct access: identified members and 

other participants that trade for their proprietary accounts; FCMs that submit orders on behalf of U.S. customers; and CPOs 

or CTAs, or entities exempt from such registration, that submit orders on behalf of U.S. pools or for accounts of U.S. 

customers for which they have discretionary authority. This is consistent with the existing no-action relief. 

The proposal also identifies certain reasons for which an FBOT’s registration could be revoked and identifies certain actions 

that, if taken by a registered FBOT, could have an adverse impact on the market and the public interest and sets forth possible

Commission actions to remedy such an adverse impact. The proposal describes the procedures to be followed by a registered 

FBOT that wants to make available for trading by direct access additional contracts, including non-narrow-based stock index 

futures contracts. Finally, the appendix to the proposed regulation identifies what should be included in an application for 

FBOT registration in order to demonstrate that the registration requirements have been met.