DCM Impartial Access Requirements

Issuing agencies

Abstract

The Commodity Futures Trading Commission ("Commission" or "CFTC") is issuing an interpretation of the requirement that designated contract markets ("DCMs") provide competitive, open, fair, and impartial access to their members and persons with trading privileges under Commission Regulation 38.151(b) ("Impartial Access Requirements"). Specifically, this final interpretive guidance is being issued to inform the public of the Commission's views on the Impartial Access Requirements that should be guiding exchanges' selections of access criteria. The Commission issues this interpretive guidance after a significant amount of time and effort overseeing the listing and trading of event contracts and other financial assets, as well as monitoring DCM access requirements.

Full Text

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<title>Federal Register, Volume 91 Issue 216 (Tuesday, November 10, 2026)</title>
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[Federal Register Volume 91, Number 216 (Tuesday, November 10, 2026)]
[Rules and Regulations]
[Pages 72407-72410]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22863]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 38


DCM Impartial Access Requirements

AGENCY: Commodity Futures Trading Commission.

ACTION: Interpretation.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is issuing an interpretation of the requirement that 
designated contract markets (``DCMs'') provide competitive, open, fair, 
and impartial access to their members and persons with trading 
privileges under Commission Regulation 38.151(b) (``Impartial Access 
Requirements''). Specifically, this final interpretive guidance is 
being issued to inform the public of the Commission's views on the 
Impartial Access Requirements that should be guiding exchanges' 
selections of access criteria. The Commission issues this interpretive 
guidance after a significant amount of time and effort overseeing the 
listing and trading of event contracts and other financial assets, as 
well as monitoring DCM access requirements.

DATES: Effective November 10, 2026.

FOR FURTHER INFORMATION CONTACT: Tyler S. Badgley, General Counsel, 
Office of the General Counsel, and Aaron M. Levine, Deputy General 
Counsel for Regulation, <a href="/cdn-cgi/l/email-protection#f48681989199959f9d9a93b497928097da939b82"><span class="__cf_email__" data-cfemail="3e4c4b525b535f555750597e5d584a5d10595148">[email&#160;protected]</span></a>, (202) 418-5000, Office of 
the General Counsel, Commodity Futures Trading Commission, Three 
Lafayette

[[Page 72408]]

Centre, 1155 21st Street NW, Washington, DC 20581; Cameron Sinsheimer, 
Counselor, Office of the General Counsel, Commodity Futures Trading 
Commission, <a href="/cdn-cgi/l/email-protection#a2d0d7cec7cfc3c9cbccc5e2c1c4d6c18cc5cdd4"><span class="__cf_email__" data-cfemail="c0b2b5aca5ada1aba9aea780a3a6b4a3eea7afb6">[email&#160;protected]</span></a>, (646) 746-3928, 290 Broadway, 6th 
Floor, New York, NY 10007; and Roger Smith, Associate Chief Counsel, 
<a href="/cdn-cgi/l/email-protection#7604051b1f021e361510021558111900"><span class="__cf_email__" data-cfemail="e49697898d908ca487829087ca838b92">[email&#160;protected]</span></a>, (202) 418-5344, Division of Market Oversight, 
Commodity Futures Trading Commission, 77 West Jackson Blvd., Suite 800, 
Chicago, IL 60604.

SUPPLEMENTARY INFORMATION:

I. Background

    A core component of the Commodity Exchange Act (``CEA'') \1\ is the 
requirement that DCMs provide competitive, open, fair, and impartial 
access to their members and persons with trading privileges. This 
measure prevents the inappropriate use of discriminatory access as a 
competitive tool against market participants. Moreover, it benefits 
DCMs and national markets by increasing overall liquidity and by 
maximizing risk management opportunities and price- and information-
discovery functions.
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    \1\ 7 U.S.C. 1 et seq.
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    The Commission is issuing this interpretive guidance to share with 
DCMs and their affiliates and partners certain views based on staff's 
experience overseeing the listing and trading of event contracts and 
other financial assets as well as monitoring DCMs' access requirements.
    This final interpretive guidance is being issued to inform the 
public of the Commission's views on the Impartial Access Requirements 
that should be guiding exchanges' selections of access criteria.

II. Regulatory Framework Requiring Impartial Access

    DCMs must comply with 23 statutory Core Principles set forth in the 
CEA,\2\ as well as applicable CFTC rules and regulations.\3\ The Core 
Principles for DCMs reflect the important role that these exchanges 
play in promoting the integrity of derivatives markets by, among other 
things, establishing and enforcing rules for trading on the DCM--
including setting open and impartial access criteria--and monitoring 
trading activity.
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    \2\ See generally CEA sec. 5(d), 7 U.S.C. 7(d).
    \3\ See generally 17 CFR part 38.
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    Core Principle 2 of the CEA provides that a DCM ``shall establish, 
monitor, and enforce compliance with the rules of the [DCM], including 
. . . access requirements.'' \4\ Core Principle 9 requires a DCM to 
``provide a competitive, open, and efficient market and mechanism for 
executing transactions that protects the price discovery process of 
trading in the centralized market of the board of trade.'' \5\
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    \4\ CEA sec. 5(d)(2)(A)(i), 7 U.S.C. 7(d)(2)(A)(i).
    \5\ CEA sec. 5(d)(9)(A), 7 U.S.C. 7(d)(9)(A).
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    Specifically, a DCM ``must provide its members, persons with 
trading privileges, and independent software vendors with impartial 
access to its markets and services, including . . . [a]ccess criteria 
that are impartial, transparent, and applied in a non-discriminatory 
manner.'' \6\ A DCM ``must establish and impartially enforce rules 
governing denials, suspensions, and revocations of a member's and a 
person with trading privileges' access privileges to the designated 
contract market, including when such actions are part of a disciplinary 
or emergency action by the designated contract market.'' \7\
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    \6\ 17 CFR 38.151(b)(1).
    \7\ Id. 38.151(c).
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III. General Impartial Access Principles

    In 2012, the Commission explained that ``impartial access rules are 
necessary in order to prevent the use of discriminatory access 
requirements as a competitive tool against certain participants.'' \8\ 
To achieve this goal, the Commission has set forth basic principles 
that should guide regulated entities in developing access criteria. 
``In particular, access to a DCM should be based on the financial and 
operational soundness of a participant, not on factors that could bar 
access and result in discriminatory access or act as a barrier to 
entry.'' \9\ Adopting fair and evenhanded access standards benefits 
both DCMs and their members. For example, ``granting impartial access 
to participants that satisfy a DCM's access requirements will likely 
enhance the DCM's liquidity and the overall transparency of the swaps 
and futures markets.'' \10\ A guiding principle is that ``DCMs may 
establish different categories of market participants, but may not 
discriminate within a particular category.'' \11\
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    \8\ Core Principles and Other Requirements for Designated 
Contract Markets, 77 FR 36612, 36625 (June 19, 2012).
    \9\ Id.
    \10\ Id.
    \11\ Id. at 36672.
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    As a general matter, the Commission believes that discriminatory 
limitations on participation affects the overall health and efficiency 
of a market. When a DCM restricts access or disincentivizes 
participation for broad categories of otherwise financially or 
operationally sound participants, market liquidity may be diminished. 
Reduced liquidity, in turn, may result in less robust price discovery. 
This degradation of pricing and market efficiency may then lead to 
increased volatility, as fewer participants are available in the 
ordinary course to absorb and respond to market shocks. Ultimately, 
these effects could undermine a DCM's ability to function as an 
effective marketplace for trading and risk management.
    As such, the Commission believes that market participants seeking 
to access a DCM must be evaluated against criteria that are clearly 
defined, published in advance, and applied uniformly. These standards 
should ensure that every participant is aware of the requirements and 
can prepare accordingly, fostering a fair environment for access to the 
DCM. Access criteria that are opaque, arbitrary, or unrelated to the 
financial and operational soundness of a participant undermine the 
principles of impartial access under Commission Regulation 38.151. 
Therefore, the Commission believes that when objective and transparent 
financial and operational eligibility requirements are met, DCMs have 
an obligation to grant access without bias. This approach supports a 
competitive and robust derivatives market that allows a wide range of 
participants to contribute to market liquidity.
    Previously, when market trends and behavior have implicated 
impartial access concerns, the Commission has responded by releasing 
guidance to regulated entities. For example, in 2011, the Commission 
proposed placing significant requirements on swap execution facilities 
(``SEFs'') to ensure impartial access, resulting in a final rule 
promulgated in 2013.\12\ Also in 2013, Division of Market Oversight, 
the Division of Clearing and Risk, and the Division of Swap Dealer and 
Intermediary Oversight (now the Market Participants Division) published 
a guidance document addressing certain trading restraints or 
``enablement mechanisms'' implemented by certain SEFs.\13\ Earlier this 
year, the Commission released a staff letter

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setting forth guidelines for DCMs in setting comparable fee structures 
in incentive programs.\14\
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    \12\ See Core Principles and Other Requirements for Swap 
Execution Facilities, 76 FR 1214 (Jan. 7, 2011) (Notice of Proposed 
Rulemaking); Core Principles and Other Requirements for Swap 
Execution Facilities, 78 FR 33476 (June 4, 2013) (Final Rule), as 
corrected, 78 FR 47154 (Aug. 5, 2013).
    \13\ Division of Clearing and Risk, Division of Market Oversight 
and Division of Swap Dealer and Intermediary Oversight Guidance on 
Application of Certain Commission Regulations to Swap Execution 
Facilities (Nov. 14, 2013), <a href="https://www.cftc.gov/sites/default/files/idc/groups/public/@newsroom/documents/file/dmostaffguidance111413.pdf">https://www.cftc.gov/sites/default/files/idc/groups/public/@newsroom/documents/file/dmostaffguidance111413.pdf</a>.
    \14\ CFTC Letter No. 26-23 (Aug. 12, 2026), <a href="https://www.cftc.gov/csl/26-23/download">https://www.cftc.gov/csl/26-23/download</a>.
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IV. Access Criteria Based On Geographic Location

    The Commission is aware that some DCMs have adopted access criteria 
that restrict access to certain event contract markets based on 
prospective traders' location or residence.
    The CEA and Commission Regulations generally do not permit a DCM to 
limit access based on the location of an otherwise eligible market 
participant within the United States.\15\ In enacting the CEA, Congress 
specifically identified a ``national public interest'' in federal 
regulation of derivatives markets because those markets ``provid[e] a 
means for managing and assuming price risks, discovering prices, or 
disseminating pricing information through trading in liquid, fair and 
financially secure trading facilities.'' \16\ Derivatives markets must 
operate on a uniform basis at a national scale in order to achieve the 
CEA's purpose.
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    \15\ Because Core Principle 2 does not allow a DCM to restrict 
access based on geography, DCMs must take reasonable steps to ensure 
that intermediaries, who must comply with DCM membership rules, do 
not impose geographic restrictions that violate impartial access. 
See CEA sec. 5(d)(2)(B), 7 U.S.C. 7(d)(2)(B) (DCMs must ``have the 
capacity to detect, investigate, and apply appropriate sanctions to 
any person that violates any rule of the contract market''). 
Further, Core Principle 12 requires DCMs, as self-regulatory 
organizations, ``to protect markets and market participants from 
abusive practices committed by any party, including abusive 
practices committed by a party acting as an agent for a 
participant'' and ``promote fair and equitable trading on the 
contract market.'' CEA sec. 5(d)(12), 7 U.S.C. 5(d)(12). This 
responsibility includes ``having methods and resources appropriate 
to the nature of the trading system and the structure of the market 
to detect trade practice and market abuses and to discipline such 
behavior, in accordance with Core Principles 2 and 4, and the 
associated regulations . . . respectively.'' 17 CFR 38.651. As such, 
the Commission believes that DCMs are responsible for ensuring that 
intermediaries are not impeding the Impartial Access Requirements 
under Core Principle 2. See also CEA sec. 5(d)(11), 7 U.S.C. 
5(d)(11); 17 CFR 1.52(c).
    \16\ CEA sec. 3(a), 7 U.S.C. 5(a). The Congressional purpose of 
fostering national derivatives trading is reinforced by the CEA's 
enjoining authority, which allows the CFTC to bring injunctive 
action against anyone ``restraining trading in any commodity for 
future delivery or any swap.'' CEA sec. 6c(a), 7 U.S.C. 13a-1(a).
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    As noted above, DCMs may not implement access criteria that 
intentionally exclude or discourage participation from market 
participants who otherwise meet eligibility requirements. When a DCM 
restricts access based on domestic geographic location--permitting 
participants from one region or State within the United States while 
barring those from another--it excludes otherwise eligible individuals. 
Such selective restrictions undermine the principle of impartial 
access, as they do not uniformly apply to all similarly situated (in 
terms of financial or operational soundness) eligible market 
participants and arbitrarily differentiate between such market 
participants based solely on their location.
    Limiting access by geographic location raises significant concerns 
for both financial integrity and risk management within derivatives 
markets. For instance, if a market participant establishes a position 
in a region where access is allowed but subsequently travels to a 
location where access is restricted, that participant would be unable 
to manage their position. That participant may not be able to 
adequately manage their position, respond to market events, or meet 
margin calls. When participants are unable to manage their positions or 
meet margin calls due to geographic restrictions, forced liquidations 
may occur. This process can generate losses for both the futures 
commission merchants and clearing organizations involved, ultimately 
heightening systemic risk across the derivatives and broader financial 
markets. As such, the resulting disruption may affect not only 
individual participants, but also the relevant market as a whole, 
undermining its integrity and efficiency.
    Limiting access based on location also detracts from a DCM's price-
discovery function and overall efficiency. In certain markets, barring 
residents of certain States or regions from participating may cause 
distortions because States and regions have differently composed 
economies. Restricting access in States or regions that are home to 
large concentrations of high-volume traders (e.g., where market making 
entities are located) is likely to introduce liquidity concerns, and 
such consequences may disproportionately affect particular contracts. 
This, in turn, would reduce overall volume and lead to wider bid-ask 
spreads, raising the cost of trading for all participants.
    Location-based restrictions may also fragment a national pool of 
liquidity. Fragmentation may impede arbitrage between related contracts 
or between derivatives and their underlying cash markets when relevant 
participants cannot access all markets from their location. Under those 
circumstances, temporary price discrepancies could persist for longer, 
and participants may face greater basis risk if available hedges track 
their exposures less closely.
    Further, location-based restrictions may concentrate trading 
activity among a smaller or less diverse set of participants. A broader 
participant base can supply different time horizons, risk tolerances, 
information, and trading strategies, which may make liquidity more 
resilient when conditions change. Removing an entire jurisdiction could 
increase dependence on a more limited group of market participants, 
particularly when the excluded jurisdiction accounts for meaningful 
activity. Sports-related contracts illustrate the point. Insomuch as 
particular contracts attract disproportionately regional interest 
(e.g., whether a home team advances to its playoffs), excluding such 
regions could decrease the contracts' overall liquidity.
    Moreover, location-based access restrictions undermine hedging 
opportunities and DCMs' price and information-discovery functions in 
additional ways when the excluded jurisdiction contains participants 
with relevant commercial experience, localized exposure or knowledge, 
or significant trading activity. For example, the exclusion of a region 
prone to extreme weather events from weather-related contracts would 
deprive that region's traders of a mechanism to hedge their exposures 
to such weather events. Likewise, to the extent a restriction excludes 
energy producers, merchants, or traders located in a region with 
substantial energy production and infrastructure, it could limit their 
ability to hedge production, shipping, and storage-related exposures, 
and could remove price signals from such hedging, arbitrages, or 
speculative activity. Similar effects may arise in other economically 
specialized areas, at least to some extent, including for example areas 
with concentrations of financial, agricultural, cultural, and 
technological expertise.
    Election markets may be particularly sensitive to harms stemming 
from geographic access restrictions. Some statewide and more localized 
election markets may generate the most volume and/or knowledge from 
residents of the State or locality where the election takes place. 
Accordingly, restricting access to a particular State's residents could 
severely undercut volume and/or the information-discovery function of 
any market concerning an election in that State. This is especially 
problematic given election contract markets' uniquely valuable 
information-discovery role, with benefits accruing nationwide even 
while the most informed trading may be sourced on a State or local 
basis. Such effects may

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extend beyond the immediate trading population because third parties, 
including media organizations and other observers, may use election-
contract prices as one source of information about expected outcomes.
    For these reasons, the Commission believes that geographic access 
restrictions are inconsistent with the CEA and Commission rules and 
regulations. The Commission expects DCMs to evaluate their access 
criteria, exchange rules, and intermediary access arrangements to 
ensure compliance.
    The Office of Management and Budget has determined that this action 
is not a significant regulatory action as defined in Executive Order 
12866, as amended, and therefore it was not subject to Executive Order 
12866 review.

    Issued in Washington, DC, on November 5, 2026, by the 
Commission.
Christopher Kirkpatrick,
Secretary of the Commission.

    Note:  The following appendix will not appear in the Code of 
Federal Regulations.

Appendix to DCM Impartial Access Requirements--Commission Voting 
Summary

    On this matter, Chairman Selig voted in the affirmative. No 
Commissioner voted in the negative.

[FR Doc. 2026-22863 Filed 11-9-26; 8:45 am]
BILLING CODE 6351-01-P


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