CFTC Opens Access for U.S. Customers to Trading in Australian Markets

May 22, 2018

Washington, DC — The Commodity Futures Trading Commission (CFTC) today announced the approval of Australian Securities Exchange Limited’s (ASX 24) application to permit direct access for U.S. customers to trade on its platform. By this order, issued May 15, 2018, ASX 24, a foreign board of trade (FBOT) is registered with the CFTC and allowed to permit members and other participants in the U.S. to trade by direct access on the exchange without having to trade through an intermediary.  In order to be registered with the CFTC, an FBOT must be legally organized under its home country regulatory regime and must be subject to relevant regulations and appropriate supervision.

The ASX 24 Order follows in the spirit of the CFTC’s regulatory deference program, which reflects the Commission’s confidence and trust in the oversight of market infrastructures and participants by the relevant home country regulators, especially in matters of market practices, transparency, and price formation. In the case of ASX 24, such supervision is carried out by the Australian Securities and Investments Commission (ASIC), which oversees ASX 24’s compliance with relevant requirements, including customer protection and market integrity measures.

“By their very nature, derivatives instruments trade in global markets,” said CFTC Chairman J. Christopher Giancarlo. “Cross-border competition, growth, and innovation are stifled if we impose piecemeal or inconsistent regulatory requirements which cause inefficiencies and higher costs.  To mitigate such an outcome, the CFTC continues to lead by example to adopt regulatory deference and support market-led activity taking place across these markets.

“Derivatives allow American agriculture producers, industrial manufacturers and financial service providers to transfer or bear exposure to the risk of variable commodity prices, foreign exchange rates, or rate of interest around the world.  Without robust and orderly global derivatives markets, American firms would bear greater risk in their international commercial activities. As a result, they would either curtail operations or be less competitive than their overseas counterparts. That would mean fewer jobs at home and diminished U.S. economic activity. This is why the CFTC seeks to ensure that global markets are salutatory and suitable for the risk transfer needs of American agriculture producers, industrial manufacturers and financial service providers, and why it is important for global regulators to take a cooperative approach to pursuing market integrity and customer protection.” 

The CFTC began accepting FBOT applications for registration in accordance with Part 48 of the CFTC regulations, which became effective on February 21, 2012. With this order, the CFTC has registered 19 FBOTs from 12 countries.  ASX 24 previously offered direct access to U.S. participants in accordance with no-action relief issued to its predecessor, the Sydney Futures Exchange Limited, in CFTC Letter No. 99-37 (August 10, 1999).  According to CFTC regulation 48.6, this no-action letter is automatically withdrawn with the issuance of the ASX 24 Order.

ASX 24 submitted an application for registration that included, among other things, representations that its regulatory regime under its regulator satisfies the requirements for registration under CFTC regulations.  After reviewing the ASX 24 application, the CFTC determined that ASX 24 has demonstrated its ability to comply with the requirements of CFTC regulations.  ASX 24 must also continue to fulfill each of the representations it made in support of its registration application.

 The CFTC issued the Order in accordance with Part 48 of the CFTC regulations, which provides that such an Order may be issued to an FBOT that satisfies the requirements for registration in CFTC regulation 48.7 and, among other things, possesses the attributes of an established, organized exchange and is subject to continued oversight by a regulator that provides comprehensive supervision and regulation that is comparable to the supervision and regulation exercised by the CFTC.