CFTC allows Korean Exchange members to apply for exemption from registration when dealing directly with US citizens

CFTC allows Korean Exchange members to apply for exemption from registration when dealing directly with US citizens


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The US Commodity Futures Trading Commission (CFTC) has issued an order to the Korea Exchange (KRX), with which it allows some of its members to trade with local citizens without being required to register with the CFTC as futures commission merchants, the regulator said on Monday.

KRX members can accept orders and funds directly from US citizens who trade on the exchange for a period of up to 30 days.

The exemption will become effective once it gets published in the Federal Register and once the affected foreign investment companies file representations with the National Futures Association (NFA).

The CFTC has ordered similar exemptions to other foreign exchanges and regulators.

Under the US laws, foreign people and entities that offer investment services with local traders are required to register in the appropriate capacity with the CFTC. However, they could also file to be exempted from registration and the application of certain CFTC regulations. This applies for entities that in their home countries comply to regulation that is comparable to that of the US.

So far, the CFTC has issued exemption orders for 18 different types of qualifying foreign companies. These include companies based in Japan, Germany, Brazil, the UK, Canada, and India, among others. These companies do not need to register with the CFTC.

A list of all companies follows: CFTC snapshot

Foreign regulators can request from the CFTC to extend the exemption period to allow qualifying entities that fall under their jurisdiction to deal with US citizens for otherwise permitted transactions on any non-US exchange.

Foreign investment companies are allowed to offer US citizens access to foreign exchange-traded futures and commodity option products without any restrictions, as well as security index and foreign government debt products, but with some limitations, as they could only be offered to certain sophisticated US customers.

Source: CFTC

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