CFTC Gives DCMs 30 Days to End Geographic Restrictions That Violate Access Rules

The Commodity Futures Trading Commission (CFTC) issued an interpretation requiring designated contract markets to end domestic geographic limits that violate impartial-access rules within 30 days, setting a new compliance deadline for U.S. derivatives venues.

Under Commission Regulation 38.151(b), designated contract markets must provide members and persons with trading privileges competitive, open, fair and impartial access. If a market cannot comply, it must submit an explanation to the CFTC’s Division of Market Oversight.

Within the same 30 days, designated contract markets should ensure intermediaries accessing their markets are not impeding access and are complying with the market’s Impartial Access Requirements. If compliance is not feasible, the market must submit an explanation to the division.

CFTC Chairman Michael S. Selig said the interpretation reflects the national scope of derivatives markets. “Derivatives markets must operate on a uniform basis at a national scale in order to achieve the purposes set out in the Commodity Exchange Act,” he said. “Geographic access restrictions are inconsistent with those purposes and the Act’s impartial access requirements.”

The CFTC will consider the facts and circumstances of each case in connection with potential action.

Impartial access has also featured in event-contract litigation. In its Kalshi decision, the Sixth Circuit rejected the position that federal access rules necessarily cover every market in every state. The appeals court also said exchanges could use location controls for sports contracts prohibited by state law.