On August 28, Montréal Exchange
Inc. (MX), the leading Canadian derivatives
exchange, and ICE Futures Canada,
Inc. (ICEFC), Canada's largest agricultural
derivatives platform, received Orders of Registration from the U.S. Commodity Futures Trading
Commission (CFTC) as Foreign Boards of Trade
(FBOTs). The FBOT approvals permit MX and ICEFC to provide their
identified members or other participants located in the U.S. with
direct access to their electronic order entry and trade matching
MX and ICEFC previously provided direct access on the basis of
no-action letters issued by CFTC staff. The no-action letters were
automatically withdrawn upon the issuance by the CFTC of the FBOT
orders. MX will offer direct access for futures contracts on
interest rates and certain broad-based security indices, as well as
options on futures contracts based on the Canadian overnight repo
rate average (CORRA) and ten-year Government of Canada bonds. ICEFC
will offer direct access for futures and options contracts on
milling wheat, canola, durum wheat, and barley.
The CFTC issued the FBOT orders in accordance with Part 48 of
its regulations, which requires that, in reviewing an application
for registration, CFTC staff examine, among other things, whether
the foreign board of trade and its clearing organization are
subject to comprehensive supervision and regulation by the
appropriate governmental authorities in their home country or
countries that is comparable to the comprehensive supervision and
regulation to which designated contract markets and derivatives
clearing organizations are respectively subject under the U.S.
Commodity Exchange Act, CFTC regulations, and other applicable U.S.
laws and regulations.
Because MX is regulated under Quebec derivatives legislation and
ICEFC is regulated under Manitoba securities laws, this development
is significant in establishing that Québec's Autorité des marchés
financiers (which oversees the MX) and the Manitoba Securities
Commission (which oversees ICEFC) each
provide comprehensive supervision and regulation that the CFTC
views as comparable to the supervision and regulation exercised by
the CFTC over these types of markets in the United States.
Conversely, this decision should also be helpful in supporting
recognition and registration applications in Quebec, Manitoba and
other Canadian jurisdictions for derivatives market infrastructure
and market participants that are subject to CFTC regulation and
oversight in the United States.
For further information, please consult the announcements by the
CFTC and MX.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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