24/7 Trading And Clearing: Recent CFTC Developments And Key Issues For Market Participants

Background and Recent Developments

The prospect of 24/7 trading and clearing of regulated derivatives has attracted significant attention this year. Over the past several months, the Commodity Futures Trading Commission (“CFTC” or the “Commission”) has taken a series of actions that collectively frame the regulatory landscape under the Commodity Exchange Act (“CEA”) for market participants considering continuous operations. This alert summarizes the key developments and the issues they raise.

Staff Advisory (May 29, 2026). The CFTC’s Division of Clearing and Risk, Division of Market Oversight, and Market Participants Division jointly issued Staff Letter No. 26-16, addressed to derivatives clearing organizations (“DCOs”), designated contract markets (“DCMs”), swap execution facilities (“SEFs”), and futures commission merchants (“FCMs”). The advisory articulates staff’s views on areas of focus for entities considering a move to 24/7 trading and clearing operations. It expressly states that it creates no new legal obligations, but encourages entities exploring continuous operations to engage with CFTC staff early.

Request for Comment (June 22, 2026). The CFTC issued a formal request for comment (“RFC”) seeking public input on two related developments in the energy derivatives markets: (1) the extension of standard futures contracts to 24/7 trading without changes to their fixed expiration, delivery, or settlement terms; and (2) the potential listing of perpetual contracts that reference physically delivered or storable energy commodities, such as crude oil. The RFC was published in the Federal Register on June 25, 2026 (91 FR 38334).

DCM Product Filings and CFTC Stay (July 2026). Thus far, one DCM submitted a product filing to the CFTC for 24/7 trading of crude oil futures, both via self-certification and for CFTC approval, and another DCM submitted product filings for CFTC approval for 24/7 trading of perpetual contracts on precious metals. On July 9, 2026, the CFTC, citing authority under 17 C.F.R. § 40.2(c), stayed the listing of 24/7 crude oil futures contract pursuant to the self-certification filing, citing the ongoing public comment period and the need to examine whether such trading is consistent with DCM Core Principles. The CFTC indicated it would conduct a thorough review under its 40.3 approval authorities.

Comment Period Extension (July 23, 2026). The CFTC extended the comment deadline by 30 days to August 26, 2026, based on requests from commenters and the addition of supplemental questions, including questions relating to the stayed crude oil contract.

Key Issues Identified in the Staff Advisory

Trading Platforms (DCMs and SEFs). The advisory states that staff believes DCMs and SEFs should avoid offering contracts that settle during illiquid overnight or weekend windows, given the view that off-peak settlement raises manipulation and pricing-distortion risk. Staff also expresses the expectation that exchanges maintain continuous real-time surveillance for abusive practices like front-running and wash trading, noting that thinly traded 24/7 markets may be more prone to wider bid/ask spreads and manipulation.

Clearinghouses (DCOs). The advisory outlines three collateral-call models for extended hours: weekday-only (the current norm), optional weekend posting, and mandatory weekend posting, each with distinct margin, liquidity, and default-management implications. Staff notes that mandatory weekend clearing may not suit all markets (e.g., agriculture), and identifies technology risk, incident notification, and staffing/vendor coverage as additional areas DCOs should address for continuous operations.

Intermediaries (FCMs). Under the CEA and CFTC regulations, FCMs are required to segregate customer funds from their own at all times. The advisory notes that extending trading to a 24/7 basis without weekend or holiday settlement could cause an FCM to fall out of segregation, and potentially capital, compliance if the market experiences significant weekend volatility. To address this, staff expects FCMs to reassess and, as needed, increase the residual interest (the FCM’s own funds held in segregation to cover customers’ undermargined amounts) they maintain under Regulation 1.11, and to consider options like customer prefunding of 24/7-trading accounts. The advisory also encourages FCMs to update their written risk management programs under Regulation 1.11 to address the segregation, operational, and capital risks specific to extended-hours trading.

Issues Raised by the RFC and Practical Considerations

The RFC poses detailed questions across several dimensions on which the CFTC is soliciting feedback, including: the reliability and manipulation-resistance of reference prices formed during off-peak hours; market surveillance and operational readiness for continuous trading; the application of the federal speculative position-limits regime; margin, clearing, and settlement design; customer protection; and effects on underlying physical markets and the commercial participants that rely on them. The Commission has emphasized that it does not take a “one-size-fits-all” approach to 24/7 trading, and that different asset classes raise distinct considerations.

For market participants considering 24/7 operations, the advisory and RFC together identify several areas the CFTC believes warrant analysis, including: confirming whether a specific product or market is suited to continuous trading (crypto-linked products may be a natural fit given existing 24/7 spot markets, while regionally concentrated markets like agriculture may present different challenges); evaluating which of the three collateral-call models is appropriate and what that choice means for margin and guarantee-fund calibration; and, for FCMs, assessing residual interest targets and the adequacy of risk management programs under Regulation 1.11, particularly with respect to auto-liquidation protocols and customer disclosures.

The comment period on the RFC remains open through August 26, 2026. These developments remain in flux, and different market participants, including DCMs, DCOs, FCMs, and end users, may have varying perspectives on the appropriate framework for 24/7 trading depending on the products and asset classes involved. Foley & Lardner LLP is monitoring these developments closely and is prepared to help clients assess the implications for their businesses and navigate the evolving regulatory landscape.