SUP 19
Commodity Futures Trading Commission
Part 30 exemption
SUP 19.1
Application
- 01/12/2004
SUP 19.1.1
See Notes
This chapter applies to a firm:
(1) whose permission includes:
(2) which carries on those activities from
an establishment maintained by the firm in
the United Kingdom;
(3) which intends to trade on behalf of US
customers on non-US futures and options exchanges; and
(4) which wishes to seek exemption under
Part 30 of the General Regulations of the US Commodity Exchange Act.
- 21/06/2001
SUP 19.2
Purpose
- 01/12/2004
SUP 19.2.1
See Notes
Section 30.3 of Part 30 of the General
Regulations under the US Commodity Exchange Act ('CFTC Part
30') makes it unlawful for any person to trade on behalf of US customers on
non-US futures and options exchanges unless the trade is transacted by or
through a US-registered futures commission merchant on a fully disclosed basis.
However, these regulations allow the CFTC to
grant an exemption from this registration requirement on a jurisdiction by
jurisdiction basis. The CFTC operates
an exemption system for firms regulated by the FSA.
- 21/06/2001
SUP 19.2.2
See Notes
- 21/06/2001
SUP 19.3
Exemption under CFTC Part 30
- 01/12/2004
SUP 19.3.1
See Notes
The CFTC can
exempt from certain CFTC rules
and obligations a non-US firm that solicits or accepts orders for non-US futures
and option transactions from customers located in the United States. The CFTC receives this power from CFTC Part 30. The exempted rules and obligations
include registration and financial requirements. The firm has to comply with
comparable regulatory requirements imposed by its home country regulator instead.
- 21/06/2001
SUP 19.3.2
See Notes
The scope of the exemption is limited
to firms trading in non-US futures and options on behalf of US customers on
non-US futures and options exchanges other than a contract market designated
as such under section 5 of the US Commodity Exchange Act.
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SUP 19.3.3
See Notes
Registration is not required if a firm
is trading for US customers through a futures commission merchant on an omnibus
basis. Trading on an omnibus basis means the customers' identities are not
revealed to the firm and all orders are given by the US futures commission
merchant, so preventing the firm from having any contact with the US customers.
- 21/06/2001
SUP 19.4
Applicable rules for firms under CFTC Part 30 exemption
- 01/12/2004
SUP 19.4.1
See Notes
A firm that
has a Part 30 exemption order must
continue to comply with the applicable requirements and standards under the regulatory system including COB. However, it becomes subject to a number
of additional US rules. The FSA is
responsible for the supervision of the firm and
its adherence to the UK requirements
and standards and additional US requirements.
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SUP 19.4.2
See Notes
CFTC rules
generally require US customers to be offered segregation in accordance with
the client money rules. This
is also an FSA requirement for
a firm with a Part
30 exemption order (see 9.3.141 to 9.3.144).
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SUP 19.4.3
See Notes
Firms should
note that, although supervision rests with the FSA,
the CFTC may be allowed access
to relevant documents if it requests, under the terms of the Part 30 exemption order.
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SUP 19.4.4
See Notes
As well as the FSA's requirements
on risk warnings, a firm obtaining
an exemption must meet the following US documentation requirements:
(1) general risk disclosure for foreign futures
and options;
(2) options disclosure; and
(3) particular additional risk disclosure
and explanatory statement to London Metal Exchange customers.
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