CFTC Interpretation Bars Domestic Geographic Restrictions on Designated Contract Market Access
The CFTC interpreted Regulation 38.151(b) to prohibit domestic geographic restrictions on DCM access as inconsistent with the Commodity Exchange Act. Chairman Michael S. Selig stressed uniform national operation of derivatives markets. DCMs and intermediaries must comply or explain within 30 days.
SCCG Take — This removes geographic barriers to foster impartial national access, requiring DCMs to align policies swiftly or face case-specific Commission review.
The Commodity Futures Trading Commission has issued an interpretation that domestic geographic restrictions by designated contract markets conflict with requirements for impartial access. The agency addressed Commission Regulation 38.151(b), which requires DCMs to provide competitive, open, fair, and impartial access to members and persons with trading privileges.
CFTC Chairman Michael S. Selig stated that derivatives markets must operate on a uniform basis at a national scale to achieve the purposes set out in the Commodity Exchange Act. Selig added that geographic access restrictions are inconsistent with those purposes and the Act’s impartial access requirements.
DCMs must cease domestic geographic restrictions that violate the Impartial Access Requirements within 30 days, or submit to the Division of Market Oversight an explanation for why such compliance is not feasible. The same 30-day deadline applies to ensuring intermediaries accessing the markets are not impeding and are complying with the DCM’s Impartial Access Requirements, or providing an explanation of infeasibility.
The Commission will consider the facts and circumstances of any particular case in connection with potential Commission action. This interpretation was reported by G3 Newswire.
The Regulatory Framework
The interpretation centers on the need for derivatives markets to function uniformly at a national scale under the Commodity Exchange Act. Selig’s statements directly tie geographic restrictions to violations of both the Act and Regulation 38.151(b). The CFTC position leaves no ambiguity that such domestic limits undermine impartial access to DCMs.
Operational Response Required
DCMs face a strict 30-day timeline to end violating restrictions or justify non-compliance to the Division of Market Oversight. The same deadline governs oversight of intermediaries to prevent impeding access. The Commission’s case-by-case review will shape any subsequent enforcement.
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