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The U.S. Commodity Futures Trading Commission’s (CFTC) said it is providing no-action relief to the two major binary options exchanges operating in the US – Cantor Exchange and Nadex.
The two are no longer required to report to swap data repositories data associated with binary option transactions and exempts them from retaining most related records.
The recordkeeping relief, however, is in very narrow circumstances and subject to a number of conditions.
First, all binary options and spread contracts covered by the relief must be fully margined or fully collateralized, as per the brokers’ requirements.
Both Cantor and Nadex must also continue to publish on their websites various transaction and position information, promptly after execution. At the same time, both exchanges must also keep the required records available for inspection upon request by CFTC and provide copies at own expense.
Another condition is that no Cantor or Nadex participant, respectively, may clear a product covered by the relief through a third party clearing member.
The US regulation permits only exchange-traded binary options. There are two CFTC-regulated exchanges – Cantor Exchange and Nadex.
Nadex is the US unit of IG Group. It offers trading in more than 10 000 instruments, forex and cryptocurrencies, commodities and stock indices.
Cantor Exchange is a subsidiary of the financial services firm Cantor Fitzgerald. The exchange offers binary option contracts with daily expiries as well as flexible intraday expiry times in currencies and commodities, as well as the weather.
