On August 28, 2025, the staff of the Division of Market Oversight (CFTC Staff) of the Commodity Futures Trading Commission (CFTC) issued Staff Advisory Letter No. 25–27 (Staff Advisory).[1] The Staff Advisory reaffirms and clarifies the CFTC’s registration framework for foreign boards of trade (FBOT)[2] that provide direct market access to members or other participants located in the United States.
In an accompanying press release,[3] the CFTC’s Acting Chairman, Caroline A. Pham, stated that the CFTC’s FBOT registration framework applies to all markets (including both traditional and digital assets markets) and also stated that the Staff Advisory should provide the necessary regulatory clarity for foreign exchanges to provide trading access to persons located in the United States. In particular, Chairman Pham focused on the relevance to digital asset trading platforms, emphasizing that the Staff Advisory provided the clarity needed to “legally onshore trading activity” giving U.S. companies that had established digital asset trading platforms outside the United States “a path back to US markets.”
Regulatory Background
The Staff Advisory sets out the current regulatory framework,[4] noting that this framework creates a distinction between trading that occurs on boards of trade located outside the United States (i.e., FBOTs) and trading that occurs on boards of trade located in the United States (i.e., domestic boards of trade).
The CFTC Staff provided a summary of the regulatory history that had historically applied to FBOTs, which culminated in the implementation of Part 48 of the CFTC’s regulations (Part 48 Rules).[5] The Part 48 Rules set out registration requirements for FBOTs, including requirements relating to market oversight, transparency, and customer protection.
With respect to a domestic board of trade, the CFTC Staff noted that these are subject to the designated contract market (DCM) regulatory framework.[6]
CFTC Staff Advisory
In the Staff Advisory, the CFTC Staff reiterated that FBOTs must register with the CFTC under the Part 48 Rules and are required to comply with the procedures, requirements, and conditions set out therein in order to be permitted to provide members or other participants located in the United States with direct access to trading on the FBOT.
Importantly, the CFTC Staff viewed the key distinguishing factor between the regulatory frameworks applicable to an FBOT and a domestic board of trade as the geographic location of the board of trade, exchange, or market. Given this view, the CFTC Staff stated that FBOTs that are properly registered under the Part 48 Rules do not need to also register as a DCM in order to provide direct access to U.S.-located members and participants. The CFTC Staff further stated that providing such direct access would not, of itself, require a market participant located outside the United States to be registered with the CFTC as a futures commission merchant (FCM). Conversely, domestic boards of trade remain subject to the DCM regulatory framework[7] and do not fall within the scope of the Part 48 Rules.
The Staff Advisory noted that FBOT registration is not automatic and requires that the FBOT satisfy various eligibility requirements, including, without limitation, that the FBOT is subject to comprehensive regulation comparable to the CFTC’s DCM regulatory framework.[8] In addition, the CFTC Staff noted that trading is limited to the following types of members and participants (subject to certain conditions):
- members and other participants undertaking proprietary trading;
- registered FCMs trading for customers;
- registered or exempted commodity pool operators and commodity trading advisors trading for, respectively, one of their U.S. pools or U.S. customer accounts; or
- registered introducing brokers.[9]
Lastly, the CFTC Staff cautioned that the Staff Advisory did not address all circumstances in which a contract must be transacted on a DCM. The CFTC Staff gave the example of swaps trading by retail market participants (i.e., participants that are not “eligible contract participants”),[10] noting that they may only execute swap transactions on or subject to the rules of a DCM and that they are also not permitted to trade swaps over the counter or on swap execution facilities. Therefore, derivatives traded on non-U.S. exchanges that are classified as swaps for U.S. regulatory purposes cannot be made available to U.S.‑located traders using the FBOT registration framework under the Part 48 Rules.
[1] Staff Advisory: Registration Framework for Foreign Boards of Trade Providing Direct Access to Members or Other Participants Located in the United States.
[2] “Foreign board of trade” is defined as “any board of trade, exchange or market located outside the United States, its territories or possessions, whether incorporated or unincorporated”; 17 CFR § 48.2(a).
[3] Acting Chairman Pham Announces FBOT Advisory to Provide Regulatory Clarity for Non-U.S. Exchanges.
[4] Section 4(a), Commodity Exchange Act.
[5] 17 CFR Part 48.
[6] 17 CFR Part 38; 7 U.S.C. § 7.
[7] 17 CFR Part 38; 7 U.S.C. § 7.
[8] 17 CFR Part 38; 7 U.S.C. § 7.
[9] 17 CFR § 48.4(b).
[10] The term “eligible contract participant” is defined in 7 U.S.C. § 1a(18).
