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CFTC advises on US investors trading foreign security futures


The US Commodity Futures Trading Commission’s division of clearing and intermediary oversight has published an advisory clarifying the extent to which certain sophisticated customers located in the US may transact in foreign security futures products. 

The advisory is intended to address questions raised by members of the public following the Securities and Exchange Commission’s publication of an order on 30 June 2009.

The order exempts certain sophisticated persons from the provisions of the Securities Exchange Act of 1934 that prohibit the offer and sale of foreign security futures products to US persons.

The advisory says that foreign boards of trade that wish to permit their US members and other participants in the US to have direct access to their electronic trade matching system (not through an intermediary) can request no-action relief from the Division of Market Oversight.

In general, properly registered or exempt persons may offer or sell most foreign exchange-traded futures and commodity option products in the US without additional approvals.

Special procedures do apply, however, to the offer and sale of security index and foreign government debt products. These procedures do not apply to foreign exchange-traded security futures products, which generally may not be offered or sold in the US until the CFTC and the US Securities and Exchange Commission adopt rules governing such products.

Under Part 30 of the CFTC's regulations, anyone who offers or sells a foreign futures or options contract to a US customer must be registered under the Commodity Exchange Act in the appropriate capacity, unless specifically exempted from such registration requirement.

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