Foreign exchanges that allow direct access to their markets by U.S. market participants have been operating for many years under no-action letter relief granted by the staff of the U.S. Commodity Futures Trading Commission (CFTC or Commission). In Section 738 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Congress amended Section 4(b) of the Commodity Exchange Act (CEA) to authorize the CFTC to adopt rules requiring registration of foreign markets in lieu of the no-action process.

On December 5, the CFTC exercised this authority and unanimously voted to adopt final rules imposing formal registration and other requirements on foreign exchanges, known as foreign boards of trade (FBOTs) that allow persons in the United States to directly access the FBOT’s electronic trading and order matching systems for futures, options on futures and CFTC-regulated swaps. See 76 Fed. Reg. 80674 (Dec. 22, 2011). These rules will replace the CFTC’s informal no-action process for FBOTs and will require FBOTs operating under these no-action letters to apply for registration. The final rules will become effective February 21, 2012.