The Commodities Futures Trading Commission provided relief from reporting requirements for two binary options exchanges.
“The U.S. Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight and Division of Clearing and Risk (Divisions) announced today that they have provided no-action relief to Cantor Futures Exchange, L.P. (CX), a designated contract market (DCM), and Cantor Clearinghouse, L.P. (CC), a derivatives clearing organization (DCO), from reporting to swap data repositories data associated with binary option transactions executed on or subject to the rules of CX and cleared by CC.” The CFTC stated. The no-action relief also exempts CC and CX from retaining most related records.
“In addition, the Divisions also announced that they provided similar relief to the North American Derivatives Exchange, Inc. (Nadex), which is a DCM and a DCO, regarding reporting data associated with binary options and spread contracts traded on or subject to Nadex’s DCM rules and cleared by Nadex in its capacity as a DCO.”
Both NADEX and CX are registered as exchanges for binary options trading in the US.
CX is a subsidiary of Cantor Fitzgerald, the well-known financial services company based in New York, while NADEX is a subsidiary of IG Group and makes its home in Chicago, Illinois.
CX trades binary options in foreign currency, gold, and weather while NADEX trades binary options in stock index futures, forex, commodities, and economic events.
While much of the fraud related to binary options trading in the US has been associated with so-called off-exchange trading- where the counterparty is the broker- that is not the case with these two exchanges which are both fully licensed and regulated by the CFTC.
The CFTC, in making it decisions, noted that both NADEX and CC provided only fully capitalised trades and that both exchanges publish on their respective websites various transaction and position information.
The exchanges act as their own clearinghouse and the no-relief letters are dependent on all these conditions continuing.