The Commodity Futures Trading Commission’s Division of Clearing and Risk, Division of Market Oversight, and Market Participants Division today issued a staff advisory regarding 24/7 trading, clearing, and settlement.
In light of the emerging interest in 24/7 trading, the divisions seek to encourage responsible innovation in these markets while reminding designated contract markets, swap execution facilities, derivatives clearing organizations, and futures commission merchants of their regulatory obligations pursuant to the Commodity Exchange Act and Commission regulations thereunder.
The advisory emphasizes the regulatory obligations and staff expectations for those entities seeking to extend trading and clearing on a 24/7 basis. It also discusses certain nuances between asset classes that should be taken into consideration when analyzing the suitability of 24/7 trading, clearing, and settlement. For example, derivatives referencing crypto assets may be well-suited for 24/7 trading due to their digital infrastructure and global reach, while other derivatives markets, such as in agricultural products, may be less suited for 24/7 trading due to their unique customer bases, regional nature, and the specialized trading and hedging practices in those markets.
Commission staff believes that CFTC registrants should take proactive steps to ensure their markets continue to evolve in a manner that complies with the CEA and Commission regulations thereunder.
