On June 30, the Commodity Futures Trading Commission's (CFTC) Market Participants Division (MPD) published a new FAQ clarifying requirements and expectations around futures commission merchant (FCM) registration and ongoing obligations. The guidance offers a consolidated source of information for new market participants as well as existing FCMs that are acquiring or expanding via corporate transactions. Responding to a surge of inquiries from entrants seeking to register as FCMs, MPD outlined the financial and operational responsibilities assumed by FCMs. The backdrop for this FAQ has been the increasing popularity of the listing of event contracts, the rise of prediction markets and the involvement of non-traditional market participants seeking to replicate the successes of crypto platforms like Crypto.com.
While the FAQ covers various topics including: registration requirements and the registration process for the entity and its associated persons, financial reporting and recordkeeping, written policies and procedures for regulatory and operational functions, capital requirements, risk management requirements, governance, duties and responsibilities of the chief compliance officer, anti-money laundering responsibilities, and customer protection in the event FCM bankruptcy, there are no new obligations established or highlighted by the FAQ.
The FAQ is available here.
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.
