On June 25, 2019, the Commodity Futures Trading Commission published for comment a proposed amendment to CFTC Regulation 30.10. Part 30 of the CFTC’s regulations govern the offer and sale of foreign futures and options to customers located in the United States. Among other requirements, Regulation 30.4 requires any person that solicits or accepts orders for execution on a foreign board of trade and that, in connection therewith, accepts any money or securities to margin any resulting contracts, to be registered with the CFTC as a futures commission merchant (FCM). Regulation 30.10 authorizes the CFTC to exempt from registration as an FCM any person located outside of the U.S. that the CFTC finds is subject to a comparable regulatory structure in the jurisdiction in which it is located. Requests for exemption are generally filed by a non-U.S. regulatory authority or self-regulatory organization on behalf of their registrants.

Although the CFTC reserves the right to condition, modify, suspend, terminate, withhold as to a specific firm or otherwise restrict any exemptive relief it grants under Regulation 30.10, the regulation currently does not provide a specific course of action should the CFTC determine that exemptive relief is no longer warranted. To address this issue, the proposed amendment to Regulation 30.10 would provide that the CFTC may terminate exemptive relief if, after appropriate notice and an opportunity to respond, the CFTC determines that: (i) there has been a material change or omission in the facts and circumstances pursuant to which relief was granted; (ii) the continued exemptive relief would be contrary to the public interest or inconsistent with the purposes of the exemption; and (iii) the information-sharing arrangements no longer adequately support exemptive relief.

Interestingly, in describing circumstances in which it could determine to withdraw a Regulation 30.10 exemption, the CFTC notes that it could take into account a lack of comity relating to the execution or clearing of any commodity interest subject to the CFTC’s exclusive jurisdiction. This appears to be the first time that the CFTC has stated that lack of comity could be a factor in determining whether a Regulation 30.10 exemption would be appropriate.

The comment period will end 30 days after the proposal is published in the Federal Register.

A full copy of the press release is available here.