The Commodity Futures Trading Commission has extended its Part 30 exemption program to the National Stock Exchange of India. Under the CFTC’s order, NSE may designate a member to accept US customers funds to trade futures and options contracts on NSE without registering as a futures commission merchant.
Compliance Weeds: Ordinarily, all entities that solicit orders from US persons or handle funds in connection with futures and options must be registered with the Commodity Futures Trading Commission in some capacity (typically as a futures commission merchant or commodity pool operator if they handle customer transactions and funds) or as an introducing broker or commodity trading advisor (if they solely handle customer transactions). Part 30 of the CFTC’s rules provides a number of exemptions for non-US-based entities to deal with US persons in connection with foreign futures and options contracts. One exemption – under CFTC Rule 30.5 – applies to any entity other than one that might otherwise be required to register as an FCM, while another – under CFTC rule 30.10 – applies to an entity that would otherwise be required to register as an FCM. A Rule 30.10 exemption typically requires the involvement of a local regulator as part of the exemption request process. (Click here to access the relevant regulations, and here for a CFTC summary of applicable requirements.) Another CFTC rule authorizes certain entities outside the United States exempted from registration as an FCM under CFTC Rule 30.10 to execute US futures and options for certain institutional customers to be carried at a registered FCM subject to strict conditions. (Click here to access CFTC Rule 3.10(c)(4).)