Data Reporting Requirements for Certain Event Contracts

Federal RegisterJul 1, 2026

Ask Donna

What actually matters in this document.

Text

COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 15, 16, and 17

RIN 3038-AF73

Data Reporting Requirements for Certain Event Contracts

AGENCY:

Commodity Futures Trading Commission.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Commodity Futures Trading Commission (“Commission” or “CFTC”) is proposing revisions to the Commission's regulations that would set forth an alternate framework for reporting of data for certain fully collateralized event contracts (the “Proposal”). These revisions would require certain reporting markets, futures commission merchants, clearing members, and foreign brokers to report certain event contracts pursuant to the regulations in parts 15 through 18 rather than the reporting regulations contained in certain sections of parts 38, 39, 43 and 45.

DATES:

Comments must be received on or before July 31, 2026.

ADDRESSES:

You may submit comments, specifically referencing “Data Reporting Requirements For Certain Event Contracts” and RIN 3038-AF73, by any of the following methods:

•

Regulations.gov: Go to https://www.regulations.gov

and press the “Search” button, then proceed as follows:

1. Under Refine Documents Results—check the box to “Only show documents open for comment”;

2. Under Agency—select “See More” and check the box for “Commodity Futures Trading Commission,” then press the Apply button;

3. Identify this proposal in the list of CFTC documents open for comment, press the “Comment” button to open the submission form, and follow the instructions on the form.

Alternatively, if you are viewing this proposal on

www.federalregister.gov,

click the “Submit A Public Comment” button at the top of the page to open the comment form. Follow the instructions on the form to submit your comment to

Regulations.gov

•

Mail:

Send to—Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.

•

Hand Delivery/Courier:

Address to—CFTC Comment Submission, Attn: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.

Please submit your comments using only one of these methods. To avoid possible delays with mail or in-person deliveries, submissions through

Regulations.gov

are encouraged.

All comments must be submitted in English or, if not, accompanied by an English translation. Do not include in your comment text or attachments any personal identifying information or business information that you do not want published online. Comments (regardless of submission method) will be published without review for, and without removal of, any personal identifying information or information your business may consider confidential.

If you wish to submit confidential information for the Commission's consideration, please contact the CFTC personnel listed in this document under

FOR FURTHER INFORMATION CONTACT

before making any submission. Please also carefully review the Commission's procedures in 17 CFR 145.9 for requesting confidential treatment under the Freedom of Information Act (FOIA) of information submitted to the Commission.

The CFTC reserves the right, but shall have no obligation, to review, pre-screen, filter, or redact all or any part of your comment submission. The CFTC also reserves the right, without further notification, to refuse to publish or to remove from public view all or any part of your submission to the extent it contains content inappropriate for publication in a comment file, such as—without limitation—obscene language, threats of violence, solicitations for commercial sales or illegal activity, or obvious spam. If a submission that is refused for or withdrawn from publication because of inappropriate content also contains comments on the merits of this proposal, such submission will be retained in the record for the matter and will be considered as required under the Administrative Procedure Act (“APA”) and other applicable laws, and may be accessible under the FOIA.

Pursuant to the APA, 5 U.S.C. 553(b)(4), a plain language summary of the proposed rule is available at

Regulations.gov

FOR FURTHER INFORMATION CONTACT:

Stephen Andrews, Deputy General Counsel for Regulation,

sdandrews@cftc.gov,

202-308-7563, Office of the General Counsel; Herminio Castro, Associate General Counsel,

hcastro@cftc.gov,

202-418-6705; Owen Kopon, Associate Director, Division of Market Oversight,

okopon@cftc.gov,

202-418-5360; Paul Chaffin, Special Counsel, Division of Market Oversight,

pchaffin@cftc.gov,

202-418-5185, in each case at the Commodity Futures Trading Commission, 1155 21st Street NW, Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

A. Introduction

B. Current Reporting Regimes for Swaps and Futures

C. Staff No-Action Letters Issued for Fully-Collateralized Event Contracts

II. Proposed Rules

A. § 16.03(a): Covered Event Contract

B. § 16.03(b)(2) and § 16.03(b)(3): Market Data and Transaction Data Reporting Requirements for DCMs

C. § 16.03(b)(1), § 16.03(c), § 17.00(j) and § 17.01(f): Large Trader Reporting Requirements for DCMs, Futures Commission Merchants, Clearing Members, and Foreign Brokers

D. § 16.03(d): Reports By Traders

E. § 16.03(e): Reporting Levels

F. § 16.03(e): Reportable Trading Volume Level

G. § 16.03(f): Real-Time Dissemination of Market Data

H. § 16.03(g): Requirement That DCMs Obtain Trader-Identifying Information

I. § 16.03(h): Recordkeeping Obligations

III. Compliance Date

IV. Related Matters

A. Cost-Benefit Considerations

B. Regulatory Flexibility Act

C. Paperwork Reduction Act

D. Antitrust Considerations

E. Executive Orders 12866, 13563, and 14192

List of Subjects

I. Background

A. Introduction

Under the Commodity Exchange Act (“CEA”) and Commission regulations, different data reporting requirements apply to swaps and futures transactions. With respect to swaps transactions, reporting parties must submit certain swap data to swap data repositories (“SDRs”),

which in turn publicly

disseminate that data.

With respect to futures transactions, certain futures data is reported directly to the Commission and also is publicly disseminated.

CEA section 2(a)(13)(G), 7 U.S.C. 2(a)(13)(G)(requiring that “[e]ach swap (whether cleared or uncleared) shall be reported to a registered swap data repository.”). Depending on whether the swap is executed on or pursuant to the rules of a swap execution facility (“SEF”) or designated contract market (“DCM”) or is an off-facility swap, the SEF, DCM, swap dealer (“SD”), major swap participant (“MSP”), or a designated reporting counterparty reports swap transaction and pricing data to an SDR as soon as technologically practicable after execution of the swap. Also, reporting counterparties, SDs, MSPs, and derivatives clearing organizations (“DCOs”) report swap continuation, valuation, and collateral data to an SDR.

See

17 CFR 43.3; 17 CFR 45.4; 7 U.S.C. 2(a)(13)(G).

See

CEA section 2(a)(13)(D), 7 U.S.C. 2(a)(13)(D). Section 2(a)(13)(B) of the CEA, 7 U.S.C. 2(a)(13)(B), authorizes the Commission to make swap transaction data available to the public in order to enhance price discovery. Typically, under the Commission's real-time swap reporting rules, SDRs perform this dissemination function.

See

17 CFR 43.4.

See

17 CFR 16.02.

This Proposal addresses the data reporting requirements for certain fully-collateralized event contracts with a binary payout structure or a variable payout structure.

The Commission has generally found that these contracts are covered by the CEA's “swap” definition.

Event contracts may fall under one or more subsections of the “swap” definition set forth in section 1a(47) of the CEA.

For example, CEA section 1a(47)(A)(i) defines the term “swap” to include “any agreement, contract, or transaction . . . that is a put, call, cap, floor, collar, or similar option of any kind that is for the purchase or sale, or based on the value, of 1 or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind.”

Section 1a(47)(A)(ii) defines the term “swap” to include “any agreement, contract, or transaction . . . that provides for any purchase, sale, payment, or delivery (other than a dividend on an equity security) that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.”

Depending on their underlying events, certain event contracts may be security-based swaps or other instruments subject to the jurisdiction of the Securities and Exchange Commission (“SEC”), however, and this Proposal is applicable to only those event contracts solely within the CFTC's jurisdiction.

A contract with a binary payout structure results, at settlement, in the payment of an absolute amount to the holder of one side of the event contract and no payment to the counterparty, while a contract with a variable payout structure can result in a payout to both counterparties based on the final settlement price.

Event contracts might be structured as other instruments such as futures contracts, which are excluded from the statutory definition of “swap.” CEA section 1a(47)(B), 7 U.S.C. 1a(47)(B) (providing “exclusions” from the definition of “swap” under the CEA, including futures, options on futures, securities such as options on securities and indexes of securities, security-based swaps, and debt securities).

See

also CEA section 2a(1)(A) and (H), 7 U.S.C. 2(a)(1)(A) and (H).

7 U.S.C. 1a(47).

7 U.S.C. 1a(47)(A)(i). CEA section 1a(36), 7 U.S.C. 1a(36), defines “option” to include “an agreement, contract, or transaction that is of the character of, or is commonly known to the trade as, an `option', `privilege', `indemnity', `bid', `offer', `put', `call', `advance guaranty', or `decline guaranty'.”

7 U.S.C. 1a(47)(A)(ii).

See In re Blockratize, inc. d/b/a Polymarket.com,

CFTC Dkt. No. 22-09, at 2 (Jan. 3, 2022) (certain “event contracts, each of which is composed of a pair of binary options, constitute swaps”).

Commodity Futures Trading Comm'n

Trade Exch. Network Ltd.,

117 F. Supp. 3d 29, 36 (D.D.C. 2015) (holding binary option event contracts allowing “customers to make predictions on the occurrence of events by either buying or selling shares” were “options”). An event contract could be a swap under both CEA section 1a(47)(A)(i) and (ii).

See

7 U.S.C. 1a(47)(B) (providing “exclusions” from the definition of “swap” under the CEA, including for securities such as security based-swaps, certain options, and debt securities);

see also

17 CFR 17.00(a)(1) (requiring position reporting for “each futures position . . . and each put and call options position . . .”).

See, e.g.,

17 CFR 16.02 (requiring daily “trade and supporting data reports” consisting of “transaction-level trade data and related order information for each futures or options contract”); 17 CFR 17.00(a) (requiring daily reporting of “each futures position, separately for each reporting market and for each future, and each put and call options position separately for each reporting market . . .”).

See, e.g.,

17 CFR 16.01(e) (requiring publication of daily volume, price, and other information by DCMs and SEFs); 17 CFR 38.500 (DCM Core Principle 9 requires DCMs 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”).

See

17 CFR 43.3. Certain reporting parties submit position data for a subset of commodity swaps.

See generally

17 CFR part 20.

See

17 CFR 16.02.

See

17 CFR 17.00.

See

17 CFR 43.4.

See, e.g.,

17 CFR 16.01(d) and (e).

C. Staff No-Action Letters Issued for Fully Collateralized Event Contracts

Prior to 2010, event contracts with a binary payout structure were reported to the Commission as options under the futures and options reporting regime.

In 2011, the Commission subsequently promulgated regulations implementing the Dodd-Frank Act and creating the swaps reporting regime.

Certain reporting markets

and DCOs (together, “Registered Entities”) have requested that the Division of Market Oversight (“DMO”) and the Division of Clearing and Risk (“DCR”) (hereinafter the “Divisions”) issue a staff no-action position with respect to the swap reporting requirements applicable to certain fully collateralized event contracts with a binary payout structure or variable payout structure.

See, e.g.,

Final Rule, Market and Large Trader Reporting, 71 FR 37809 (July 3, 2006) (establishing reporting levels for binary option event contracts listed on HedgeStreet).

See

17 CFR part 49.

A “reporting market” is a “designated contract market or a registered entity under section 1a(40) of the [CEA].” 17 CFR 15.00(q).

See infra

note 28.

The requesters asked to report the fully collateralized event contracts under a version of the futures and options reporting regime instead of the swaps reporting regime set forth in Commission regulations 38.8(b), 38.10, 38.951 (to the extent that regulation 38.951 requires compliance with part 45 of the Commission's regulations), 39.20(b)(2), and parts 43 and 45 of the Commission's regulations (collectively, the “Relevant Regulations”). In making the requests, the requesters indicated that contracts for which they requested relief are swaps, but share most of the characteristics of exchange-traded futures or options thereon (

i.e.,

fungibility, offset, exchange traded with standardized terms on a single marketplace) and lack the indicia of traditional swaps (

i.e.,

bilateral, traded over-the-counter, and customized). Additionally, requesters generally argued that because the relevant contracts must be fully collateralized, potential market participant exposures associated with trading the contracts were expected to be lower than those associated with traditional swaps and swaps market participants. Such contracts, the requesters argued, have no bearing on systemic risk or potential transmission of risk or contagion to systemically important financial institutions. For that reason, the requesters noted that the policy goals of parts 43 and 45 have little applicability to the relevant contracts.

See, e.g.,

CFTC Letter No. 17-31 (June 30, 2017),

https://www.cftc.gov/csl/17-31/download;

CFTC Letter No. 25-44 (Dec. 11, 2025

), https://www.cftc.gov/csl/25-44/download.

Certain DCMs have represented that it would be impractical and uneconomic to report small-notional-size swaps to an SDR.

See, e.g.,

CFTC Letter No. 25-44 (Dec. 11, 2025).

The Divisions have granted 16 staff no-action letters to date (the “Staff Event Contract Reporting No-Action Letters” or “Staff No-Action Letters”).

The Divisions took the no-action position set out in the Staff Event Contract Reporting No-Action Letters based on the requesters complying with the following conditions: (1) the covered contracts must be fully collateralized positions, as defined by Commission regulation 39.2;

(2) the covered contracts must be cleared; (3) the DCM will publish on its website the following time and sales data for all covered contract transactions promptly after execution thereof: trade timestamp, contract, quantity, and price (in USD); (4) the DCM will provide the Commission with all transactional information described in Commission regulation 16.02;

(5) the requesters will otherwise comply with all reporting and recordkeeping requirements of the CEA and Commission regulations applicable to them in their capacities as a DCM and a DCO, other than the Relevant Regulations, including, but not limited to, the applicable requirements of parts 38 and 39 of the Commission's regulations (the “Required Records”); and (6) the requesters will keep the Required Records open to inspection upon request by any representative of the Commission, the United States Department of Justice, or the Securities and Exchange Commission, or by any representative of a prudential regulator as authorized by the Commission. Furthermore, copies of all such records must also be provided, at the expense of requesters, to any representative of the Commission upon request. The requesters must also provide copies of the Required Records either by electronic means, in hard copy, or both, as requested by the Commission, with the sole exception that copies of records originally created and exclusively maintained in paper form may be provided in hard copy only. One effect of these conditions was that the contracts subject to the no-action positions look and trade similarly to the historical HedgeStreet Contracts addressed in the Commission's 2006 Market and Large Trader Reporting rulemaking.

See

CFTC Letter No. 17-31 (June 30, 2017),

https://www.cftc.gov/csl/17-31/download;

CFTC Letter No. 17-32 (June 30, 2017

), https://www.cftc.gov/csl/17-32/download;

CFTC Letter No. 21-11 (Apr. 22, 2021),

https://www.cftc.gov/csl/21-11/download;

CFTC Letter No. 24-09 (July 12, 2024),

https://www.cftc.gov/csl/24-09/download;

CFTC Letter No. 24-12 (Sept. 3, 2024),

https://www.cftc.gov/csl/24-12/download;

CFTC Letter No. 24-15 (Oct. 4, 2024),

https://www.cftc.gov/csl/24-15/download;

CFTC Letter No. 25-02 (Jan. 31, 2025),

https://www.cftc.gov/csl/25-02/download;

CFTC Letter No. 25-23 (Jul. 22, 2025),

https://www.cftc.gov/csl/25-23/download;

CFTC Letter No. 25-26 (Aug. 7, 2025),

https://www.cftc.gov/csl/25-26/download;

CFTC Letter No. 25-28 (Sept. 3, 2025),

https://www.cftc.gov/csl/25-28/download;

CFTC Letter No. 25-35 (Sept. 30, 2025),

https://www.cftc.gov/csl/25-35/download;

CFTC Letter No. 25-44 (Dec. 11, 2025),

https://www.cftc.gov/csl/25-44/download;

CFTC Letter No. 25-45 (Dec. 11, 2025),

https://www.cftc.gov/csl/25-45/download;

CFTC Letter No. 25-47 (Dec. 11, 2025),

https://www.cftc.gov/csl/25-47/download;

CFTC Letter No. 25-48 (Dec. 11, 2025),

https://www.cftc.gov/csl/25-48/download;

and CFTC Letter No. 26-12 (May 1, 2026);

https://www.cftc.gov/csl/26-12/download. See also

CFTC Letter No. 26-14 (May 13, 2026),

available at https://www.cftc.gov/csl/26-14/download

(providing a no-action position that would allow for more streamlined grants of staff no-action positions effective until a final rule is adopted by the Commission addressing this matter).

Commission regulations define “fully collateralized position” as “a contract cleared by a derivatives clearing organization that requires the derivatives clearing organization to hold, at all times, funds in the form of the required payment sufficient to cover the maximum possible loss that a party or counterparty could incur upon liquidation or expiration of the contract.” 17 CFR 39.2.

Section 16.02 requires reporting markets to “provide trade and supporting data reports to the Commission on a daily basis,” which include, among other things, “transaction-level trade data and related order information for each futures or options contract.” 17 CFR 16.02.

Final Rule, Market and Large Trader Reporting, 71 FR 37809, 37812 (July 3, 2006). HedgeStreet was the first DCM dedicated to trading event contracts. HedgeStreet listed event contracts on corporate mergers, weather events, and economic indicators. Effective June 21, 2009, HedgeStreet changed its name to North American Derivatives Exchange, Inc. (“NADEX”). Before the promulgation of the Dodd-Frank Act in 2010, HedgeStreet contracts were

reported under the futures and options reporting regime.

More recently, the Commission has received an increasing number of applications for DCM designation from entities with a stated interest in offering event contracts for trading.

The Commission's experience is that entities seeking DCM designation and seeking to list event contracts are likely to seek a staff no-action letter similar to the Staff Event Contract Reporting No-Action Letters. The Commission anticipates receiving additional similar requests in the future.

As of May 1, 2026, Commission staff are reviewing several pending applications for DCM designation from entities with a stated interest in operating prediction markets. Commission staff have received multiple additional inquiries from other entities indicating an interest in applying for DCM registration in order to operate prediction markets. From 2006 through 2020, DCMs listed for trading an average of approximately five event contracts per year. In 2021, this number increased to 131, and the number of newly listed event contracts per year remained at a similar level until 2025, when DCMs certified approximately 1,600 event contracts for listing for trading.

II. Proposed Rules

This Proposal would set forth an alternative reporting regime for a specific category of event contracts based on the futures and options reporting regime and eliminate the need for Registered Entities to seek a staff no-action letter in the manner set forth in the Staff Event Contract Reporting No-Action Letters. The Proposal would codify into regulation certain aspects of the Staff Event Contract Reporting No-Action Letters issued by the Divisions.

If the Proposal is finalized, the Commission expects the Divisions to withdraw the Staff Event Contract Reporting No-Action Letters upon the compliance date of a final rule, as a final rule based on the Proposal would supersede those no-action letters and render them moot.

The Proposal would amend part 16, concerning “Reports by Contract Markets and Swap Execution Facilities” to add a new section 16.03, titled “Covered Event Contracts.” The Proposal would explicitly provide for reporting pursuant to § 16.00, § 16.01, part 17, and part 18 that were not specifically identified in the Staff Event Contract Reporting No-Action Letters, but are nevertheless currently required for futures and options. The Proposal would also amend part 15, concerning “General Provisions” applicable to “Reports,” to add additional sections addressing data reporting requirements applicable to certain event contracts. In particular, proposed § 16.03 would (1) define the group of event contracts to which the alternative reporting regime would apply (“Covered Event Contracts”),

(2) enumerate the reporting and recordkeeping requirements—the Relevant Regulations—that, although generally applicable to swaps, shall not apply to Covered Event Contracts, (3) enumerate reporting and recordkeeping requirements that do apply to Covered Event Contracts, (4) establish reporting levels for position reporting for Covered Event Contracts, (5) establish public data dissemination requirements for DCMs listing Covered Event Contracts for trade, (6) establish a requirement that DCMs listing Covered Event Contracts for trade obtain certain customer-identifying data, and (7) establish a requirement that DCMs and DCOs comply with recordkeeping requirements applicable to futures and options.

The proposed “Covered Event Contract” definition is not intended to and should not be construed to define “event contract” for any other purpose.

Continuing to address these requests serially and

ad hoc

raises several concerns. First, the No-Action Letters are not Commission actions carrying the force of law; they are staff actions providing a no-action position that beneficiaries of the letters may rely on. Second, reliance on the

ad hoc

no-action letter process is an inefficient approach to a recurrent issue that is best addressed through rulemaking. A regulatory regime that specifically addresses Covered Event Contracts reporting would provide a uniform and consistent approach while ensuring the Commission obtains the necessary information to address the CEA's objectives of reducing systemic risk, increasing transparency, and promoting market integrity. Third, continuing to address Covered Event Contracts reporting through no-action letters may create uncertainty and unnecessary burdens on potential registrants during the application process. Reliance on Staff Event Contract Reporting No-Action Letters without a codified reporting and recordkeeping regime for event contracts is a tenuous basis to devote resources and may cause reporting parties to proceed cautiously in launching new products, thereby inhibiting innovation.

Fourth, the Commission benefits when data for similar contracts are reported in a standardized and consistent manner, as this allows aggregation of data for similar contracts in a single database for purposes of market monitoring, analysis, or surveillance.

A no-action letter is based on the specific facts and circumstances addressed by the letter and only the beneficiary of the no-action letter may rely on it.

See

§ 140.99(a)(2), 17 CFR 140.99(a)(2). Also, simply requesting a no-action letter from staff pursuant to § 140.99 results in some additional burden.

See, e.g.,

Final rule, Requests for Exemptive, No-Action and Interpretive Letters, 63 FR 68175, 68180 (Dec. 10, 1998) (estimating paperwork burden associated with § 140.99).

The Commission has found the reporting regime applicable to futures and options is better-suited for reporting transaction data for the event contracts reported pursuant to the Staff Event Contract Reporting No-Action Letters. While event contracts generally meet the “swap” definition, the Covered Event Contracts have characteristics in common with futures and options on futures, including highly-standardized terms, exchange-trading protocols, and fungibility.

Additionally, because Covered Event Contracts must be fully collateralized and cleared through a DCO, the Commission preliminarily believes that certain risks associated with trading Covered Event Contracts—including systemic risk and counterparty credit risk—are lower than those associated with traditional swaps and swaps market participants.

See supra

notes 5-6 and accompanying text.

Market risk may nevertheless increase depending on the given potential volatility involving he underlier at issue for a given contract and due to absolute nature of payouts.

The Proposal would nevertheless require Registered Entities to provide the Commission and the public with essential data based on the futures and options regulatory regime, similar to the conditions set forth in the Staff Event Contract Reporting No-Action Letters. Proposed § 16.03(b) would apply the futures and options reporting requirements of §§ 16.00, 16.01, and 16.02 to DCMs listing the Covered Event Contracts.

The market and transaction data reported pursuant to these provisions would provide the Commission with information similar to the information required to be reported by part 43 and part 45. This data would enable the Commission to monitor the Covered Event Contracts markets to ensure their financial integrity and that market participants are protected from fraudulent or other abusive sales practices.

See

proposed § 16.03(b), applying the provisions of 17 CFR 16.00, 16.01 and 16.02.

The Commission would further require Registered Entities to publish on their website time and sales data, specifically trade timestamp, contract ticker symbol, trade quantity, and price (in USD) for all Covered Event Contract transactions as soon as technologically practicable after execution thereof. Requiring Registered Entities to publicly disseminate this information on their website would allow market participants and the public to analyze

Covered Event Contract transaction and pricing data, ensuring equal access to the information similar to the goals of the real-time swap disclosure requirements.

It would also harmonize the timeframe to make public the reports with the current standard generally applicable to dissemination of swap data. Accordingly, the Commission believes that requiring the publication of the Covered Event Contracts information advances the purposes of the Dodd-Frank Act of price discovery and transparency.

See

Notice of Proposal, Real-Time Public Reporting of Swap Transaction Data, 75 FR 76140, 76148 (Dec. 7, 2010).

See

Final Rule, Real-Time Public Reporting of Swap Transaction Data, 77 FR 1182, 1186 note 30 and accompanying text (Jan. 9, 2012)(noting that CEA section 2(a)(13)(B) provides that the purpose of section 727 of the Dodd-Frank Act is “to authorize the Commission to make swap transaction and pricing data available to the public in such form and at such times as the Commission determines appropriate to enhance price discovery.”).

The Commission believes that codifying the use of the futures and options reporting framework for the Covered Event Contracts provides for a more cost effective method to address the concerns raised by these requests while still providing the Commission access to the trading data for these instruments, which it can compile and aggregate, allowing it greater monitoring ability at a micro and macro level. By requiring reporting of Covered Event Contracts under the futures and options regulatory regime, the Proposal provides the right balance of allowing the Commission to obtain the necessary information to ensure the CEA's regulatory oversight goals are met, advancing innovation, rationalizing costs to market participants, and establishing a reporting framework that accommodates the reporting parties' abilities to provide Covered Event Contract information.

A. § 16.03(a): Covered Event Contracts

In order to implement the alternate reporting framework set out in the Proposal, the Commission proposes a new section “Covered Event Contracts.” The proposed section is not intended to and should not be construed to define “event contract” for any other purpose. The proposed section is intended only to set forth parameters for determining the applicable data reporting requirements for Covered Event Contracts and apply them to the types of event contracts that are subject to the Staff Event Contract Reporting No-Action Letters. Covered Event Contracts that meet the four prongs set forth in proposed § 16.03(a) would be subject to the reporting regime of proposed § 16.03.

The first prong requires the contract to meet the definition of swap set forth in section 1a(47)(A)(i) or (ii) of the Act. The Commission preliminarily believes that requiring a contract to be a swap under these parts of the swap definition will ensure that only those contracts that are subject to the Staff Event Contract Reporting No-Action Letters would be subject to the reporting regime of proposed § 16.03.

In this regard, the Commission preliminarily believes that a contract that meets the definition of swap set forth in section 1a(47)(A)(iii), for example, is and should remain subject to the SDR reporting regime. Additionally, as stated in section I.A above, depending on their underlying events, certain event contracts may be options on securities or security-based swaps or other instruments subject to the jurisdiction of the SEC, and this Proposal does not apply to such event contracts.

Second, a contract must be listed for trade on a DCM and cleared through a DCO. This requirement is consistent with the Staff Event Contract Reporting No-Action Letters, which require the covered contracts to trade on a DCM and, therefore, be cleared through a DCO. Central clearing mitigates both system risk and risk to individual market participants.

This requirement also ensures that the key protections provided through the DCM and DCO Core Principles apply to Covered Event Contract transactions.

See, e.g.,

Final Rule “Clearing Requirement Determination Under Section 2(h) of the CEA for Interest Rate Swaps To Account for the Transition From LIBOR and Other IBORs to Alternative Reference Rates,” 87 FR 52182, 52206 (Aug. 24, 2022).

See

DCM Core Principle 11 (“Financial Integrity of Contracts”), CEA section 5(d)(11), 7 U.S.C. 7(d)(11); CEA section 2(h)(1), 7 U.S.C. 2(h)(1) (requiring all swaps that are required to be cleared be cleared by a Commission-registered DCO); 17 CFR 38.601(a). As a practical matter, Covered Event Contract markets typically include non-ECP participants, and non-ECP retail participants can only transact in swaps on a DCM.

See

CEA section 2(e), 7 U.S.C. 2(e).

Third, a contract must trade as a fully collateralized position, as defined in § 39.2 of the Commission's regulations.

Full collateralization mitigates the systemic risk issues that arise with margined contracts. In this regard, full collateralization prevents a DCO from being exposed to credit risk stemming from the inability of a clearing member or customer of a clearing member to meet a margin call or a call for additional capital.

See supra

note 30.

See

Final Rule, Derivatives Clearing Organization General Provisions and Core Principles, 85 FR 4800, 4803-4804 (Jan. 27, 2020).

Finally, a Covered Event Contract, which may be referred to as a binary option, must either have (1) a binary payout structure, meaning that the contract results, at settlement, in the payment of an absolute amount to the holder of one side of the contract and no payment to the counterparty; or (2) a variable payout structure, meaning that the contract results, at settlement, in payment to both counterparties to the contract based on the final settlement price, though only one counterparty ultimately profits. The intent of this prong is to apply the Proposal's alternate data reporting regime to only those swaps that are structured like those covered by the Staff Event Contract Reporting No-Action Letters and to ensure that all other swaps—those that currently comply with Part 43 and Part 45—continue to report data to SDRs.

Proposed § 16.03(a) also enumerates the Relevant Regulations that would not apply to a Covered Event Contract. Specifically, reporting parties for a Covered Event Contract would not be required to comply with §§ 38.8, 38.10, 38.951 (to the extent regulation 38.951 requires compliance with part 45 of the Commission's regulations), 39.20(b)(2), and parts 43 and part 45 of the Commission's regulations, or the requirements of the relevant CEA provisions pursuant to which those regulations were promulgated. Proposed § 16.03(a) is consistent with the Relevant Regulations addressed in the Staff Event Contract Reporting No-Action Letters.

Covered Event Contracts have a simpler pricing and payout structure than those the Relevant Regulations were designed to capture.

Furthermore, part 45 includes many fields that may be applicable to more traditional swaps, such as CDS index attachment point, Exchange rate, Exchange Rate Basis, Floating rate payment frequency period multiplier, Original swap USI, Original swap USI, Physical delivery location, and many others, but are not applicable to Covered Event Contracts. Requiring Registered Entities to report under the swaps reporting regime Registered Entities would require investment in reporting infrastructure that would not lead to the reporting of any useful information, particularly when a suitable alternative reporting regime is available. As such, requiring the Registered Entities to comply with the Relevant Regulations for Covered Event Contracts would not be economically feasible. And the Commission can obtain the necessary information pursuant to the futures and options regime to conduct its regulatory oversight of the Covered Event Contracts. As discussed above, reporting

the Covered Event Contracts, through Part 16 and maintaining records pursuant to the general recordkeeping requirements in § 1.31, would enable the Commission to monitor the Covered Event Contracts to ensure their financial integrity and that market participants are protected from fraudulent or other abusive sales practices. Public dissemination of the Covered Event Contract information on the Registered Entities' website would allow market participants and the public to analyze the swap transaction and pricing data, ensuring equal access to the information similar to the goals of the real-time swap disclosure requirements.

See supra

note 4 and accompanying text.

Subsequent sections of proposed § 16.03, discussed below, specify the alternate reporting requirements for Covered Event Contracts. These requirements are intended to ensure that the Commission receives sufficient data to fulfill its market monitoring, analysis, and surveillance objectives, and to otherwise satisfy the relevant purposes of the CEA. In particular, the framework set out in this Proposal would continue to ensure that swap transaction and pricing data is made available to the public in a manner that enhances price discovery and continues to improve reporting and transparency.

See

7 U.S.C. 2(a)(13)(B),

see also

Public Law 111-203, 124 Stat. 1376 (2010).

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, including proposed § 16.03(a). The Commission requests specific comment on the following:

(1) Whether the proposed definition of Covered Event Contracts in § 16.03(a) effectively limits the alternate reporting regime set out in proposed § 16.03 to the types of contracts covered by the Staff Event Contract Reporting No-Action Letters such that swaps that have traditionally been reported under the part 43 and part 45 regime continue to be reported under that regime.

(2) Whether an alternative approach whereby a DCM that lists Covered Event Contracts registers with the Commission as an SDR and reports Covered Event Contract data under the part 43 and part 45 regime would be a feasible alternative. What would be the costs and benefits of a DCM registering as an SDR?

(3) Whether an alternative approach whereby Covered Event Contract data is reported to an SDR, based on the futures and options reporting regime and through a different form and manner of reporting than currently exists for swaps, would be more practical and economically feasible for reporting parties. What would that form and manner of reporting be? What would be the costs and benefits of such alternative reporting to an SDR?

(4) Whether the Proposal undermines, or on the other hand, enhances transparency, competition, and market integrity. If so, please explain in detail and provide any examples.

B. § 16.03(b)(2) and § 16.03(b)(3): Market Data and Transaction Data Reporting Requirements for DCMs

The Proposal would require DCMs to report Covered Event Contracts in a manner largely consistent with the futures and options reporting regime for exclusively self-cleared contracts, rather than the SDR reporting regime applicable to swaps. Specifically, proposed § 16.03(b) would require DCMs to submit to the Commission daily market data required to be reported pursuant to § 16.01

and daily transaction and supplemental data required to be reported pursuant to § 16.02.

Regulation 16.01 requires daily reporting and public dissemination of market data for both (a) swaps and (b) futures and options.

See

17 CFR 16.01. As such, § 16.01 was required with respect to contracts subject to the Staff Event Contract Reporting No-Action Letters and the parties who received the Staff No-Action Letters have submitted such data to the Commission. Commission staff have developed separate data transmission standards and guidebooks detailing those standards for swaps and for futures and options. For purposes of proposed § 16.03(b)(2), DCMs should report § 16.01 data pursuant to the data transmission standard applicable to futures and options. This will facilitate linking data reported pursuant to § 16.01 with data reported pursuant to § 16.02 and part 17.

With respect to market data reported pursuant to § 16.01, Commission regulations require all DCMs to report daily information concerning trading volume, open contracts, prices, and critical dates. Because § 16.01 applies to all DCM-listed contracts regardless of whether those contracts are swaps or futures, it is not specified as a condition in the Staff Event Contract Reporting No-Action Letters.

The Proposal would now make explicit that daily reporting pursuant to § 16.01 is required for Covered Event Contracts.

The Proposal would also specify that § 16.01 reports must include certain settlement information, including whether the event that is the subject of each Covered Event Contract occurred and, if so, the event that occurred, the time and date the event occurred, and the source used to determine whether the event occurred. Such information is a necessary component of the settlement price reported by DCMs pursuant to § 16.01(b)(2)(ii).

With respect to § 16.02, the proposal would require that DCMs provide trade and supporting data reports to the Commission. These reports were specifically included as one of the conditions of the Staff No-Action Letters and the Commission is continuing to require these reports of transaction-level trade data and related order information for the Covered Event Contracts. As it noted when adopting the § 16.02 final rules, the Commission uses market, transaction, and large trader reporting collectively to effectuate its surveillance programs.

Regulation 16.00 was also not specifically included in the Staff Event Contract Reporting No-Action Letters, but it is generally applicable to DCMs. Regulation 16.00 is addressed in section II.C. below as part of the large trader discussion.

Regulation 16.02 was specifically included as one of the conditions of the Staff Event Contract Reporting No-Action Letters.

17 CFR 16.01(b)(2)(ii). The Commission currently receives such settlement information from DCMs listing contracts that would meet the Proposal's definition of Covered Event Contracts in a separate “settlement file.”

See

Final Rule “Significant Price Discovery Contracts on Exempt Commercial Markets,” 74 FR 12178, 12179 (Mar. 23, 2009).

Although submitted in a different form and manner than the swap data required to be reported pursuant to part 45, reporting of Covered Event Contracts pursuant to §§ 16.01 and 16.02 would provide granular market and transaction data more suitable for Covered Event Contracts that, based on the Commission's experience receiving futures and options reporting for the past nine years for the Covered Event Contracts, the Commission believes would meet similar goals of the swaps reporting regime. Reporting pursuant to part 16 would be sufficient to support the CEA's objectives of reducing systemic risk, increasing transparency, and promoting market integrity.

This data would enable the Commission to monitor Covered Event Contract markets to ensure their financial integrity and that market participants are protected from fraudulent or other abusive sales practices. Therefore, the Commission believes that receiving §§ 16.01 and 16.02 data in lieu of part 45 swap data will not diminish the quality or granularity of data needed to carry out the Commission's market and financial surveillance programs. Additionally, given § 16.02 data was required as part of the Staff Event Contract Reporting

No-Action Letters, the Commission preliminarily believes that the costs of including this data reporting requirement in the Proposal will be minimal.

Cf., e.g.,

Final Rule, Significant Price Discovery Contracts on Exempt Commercial Markets, 74 FR 12178, 12179 (Mar. 23, 2009) (describing use of § 16.01 and § 16.02 data to effectuate the Commission's market and financial surveillance programs, including to detect and prevent market manipulation and to measure the financial and systemic risks that large contract positions may pose).

C. § 16.03(b)(1), § 16.03(c), § 17.00(j) and § 17.01(f): Large Trader Reporting Requirements for DCMs, Futures Commission Merchants, Clearing Members, and Foreign Brokers

The Commission's large trader reporting scheme requires reporting of information by DCMs, futures commission Merchants (“FCMs”), clearing members, and foreign brokers with respect to positions in open contracts in futures and options, including the size of daily positions of “special accounts”

that exceed certain reporting thresholds,

information identifying the owners and controllers of special accounts,

information identifying the owners and controllers of volume threshold accounts reported on Form 102,

information concerning omnibus accounts reported on Form 71,

and information necessary to identify the traders of such accounts reported on Form 40.

Position data reporting has historically served as a cornerstone of the Commission's market surveillance program.

17 CFR 15.00(r) (defining “special account” as any commodity futures or option account in which there is a “reportable position”).

see also

71 FR at 37813 n.53 (“The reporting framework for exclusively self-cleared contracts is narrowly tailored to be contract specific. In other words, a reporting market may list both exclusively self-cleared and other contracts. The alternative reporting approach, however, would only apply to exclusively self-cleared contracts.”).

See id.

(stating that “[w]ith respect to exclusively self-cleared contracts, traders in general may not have the requisite resources or regulatory experience to comply with Part 17” and therefore, “[i]n order to not place any daily reporting burden on traders, the Commission is . . . adopting final rules that place reporting markets in the regulatory position of market participants that trade in exclusively self-cleared contracts”).

17 CFR 16.00(c), 17.00(i), 17.01(d).

The Commission also notes the format for submitting large trader position reports required under § 17.00 is subject to change due to rule amendments published in 2024.

The compliance date for those amendments is June 3, 2026.

However, DMO has published a no-action letter stating that DMO will not recommend an enforcement action against any DCM, FCM, clearing member, or foreign broker for failure to comply with those rule amendments until certain conditions are met, in order to facilitate time for testing and implementation.

It is expected that this no-action position will expire on July 26, 2027,

at which point market participants will comply with the revised part 17 reporting requirements. Because the 2024 rulemaking modernizes the data reporting format and submission standard, and to the extent reporting parties require more time for testing and implementation, the Commission is proposing that the implementation date for proposed § 16.03(b)(1) and § 16.03(c) be the later of either (a) six months following publication of a final rule stemming from this notice in the

Federal Register

or (b) July 26, 2027.

See

Final Rule, Large Trader Reporting Requirements, 89 FR 47439 (June 3, 2024).

See

89 FR at 47439.

CFTC Letter No. 26-02 (Jan. 27, 2026),

available at https://www.cftc.gov/csl/26-02/download.

Specifically, CFTC Letter No. 26-02 states that DMO “will not recommend the Commission initiate an enforcement action against an FCM, clearing member, foreign broker, or DCM for failure to comply with the Final Rule until eighteen months after Commission staff has (1) publicly announced the commencement of calls with market participants regarding implementation; (2) announced the availability of the CFTC Portal for testing for a period; and (3) published a revised Part 17 Guidebook,” on the condition that market participants continue to submit part 17 reporting pursuant to the regulations in effect on June 2, 2024.

Id.

at 2.

Press Release, CFTC Staff Issues No-Action Letter, Announces Implementation Updates to 2024 Large Trader Reporting Rule, CFTC Release No. 9174-26 (Jan. 27, 2026),

available at https://www.cftc.gov/PressRoom/PressReleases/9174-26.

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, including proposed §§ 16.03(b)(1), 16.03(c), 17.00(j), and 17.01(f). The Commission requests specific comment on the following:

(5) Whether adopting proposed § 17.00(j) and § 17.01(f) to require DCMs to provide part 17 reporting for direct clearing members, and intermediaries to provide part 17 reporting for their customers would create operational challenges for DCMs or intermediaries participating in those contract markets where there exists both direct and intermediated clearing.

(6) Whether proposed § 17.00(j) and § 17.01(f) are sufficiently narrow to capture only retail traders and not institutional or other traders that may be better equipped to submit routine large trader reporting on their own behalf.

D. § 16.03(d): Reports By Traders

Proposed § 16.03(d) would specifically require traders to file reports pursuant to part 18 for Covered Event Contracts, upon receiving a special call from the Commission.

Such reporting would be consistent with the reporting structure applicable to futures and options contracts. Regulation 18.04 requires, after a special call of the Commission, each trader holding or controlling a reportable position file with the Commission a “Statement of Reporting Trader” on Form 40, at such time and place as directed in the call.

Form 40 information supports the Commission's ability to perform effective surveillance by providing the Commission with more detailed data concerning large traders, including such traders' relationships with other entities and relationships with other persons that influence or exercise control over their trading. Additionally, Form 40 provides the Commission with information about the business activities of the reporting trader. Form 40 also enables the Commission to compare the trading goals that a reporting trader reports with its subsequent market activity.

Part 18 was not specifically included in the Staff Event Contract Reporting No-Action Letters, but it was still required to be followed under the Staff Event Contract Reporting No-Action Letters.

17 CFR 18.04.

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, including proposed § 16.03(d).

E. § 16.03(e): Reporting Levels

As discussed above, the Commission's large trader reporting scheme requires reporting of information by DCMs, FCMs, clearing members and foreign brokers with respect to positions in open contracts in futures and options, including the size of daily positions of special accounts.

Whether large trader position reporting requirements apply to a particular account depends on whether that account equals or exceeds the relevant reporting level set out in § 15.03 of the Commission's regulations.

Section 15.03(b) enumerates specific reporting levels applicable to specific contracts and applies a default reporting level of 25 contracts to all other contracts.

See supra notes 55-59 and accompanying text.

See

17 CFR 15.00, 15.03. The firms that carry accounts that become reportable are required to identify those accounts on Form 102 and report positions in the accounts to the Commission.

See

17 CFR 17.00, 17.01.

17 CFR 15.03(b).

With respect to liquid contracts, the Commission typically calibrates § 15.03 reporting levels with the goal of ensuring that the aggregate of positions reported to the Commission represents approximately 70 to 90 percent of the open interest in any given contract.

The Commission also analyzes factors such as the terms and conditions of a contract, its trading volume, its level of open interest, its typical open position size, and the Commission's regulatory experience with similar contracts prior to revising or codifying new contract reporting levels in § 15.03(b).

See

71 FR at 37810 n.12; Final Rule, Reporting Levels and Recordkeeping, 69 FR 76392, 76393 (Dec. 21, 2004).

See id.

The reporting level applicable to event contracts would generally be the default 25-contract threshold applicable to “Other Commodities.”

The Commission is proposing a different reporting level for Covered Event Contracts. Covered Event Contracts commonly pay a maximum of $1 per contract. Accordingly, the Commission proposes a reporting level based on contracts that pay a maximum of $1. Proposed changes to § 15.03(b) would add a reporting level of 125,000

contracts for “Covered Event Contracts (1 USD)” (or the equivalent notional value with a contract size other than 1 USD), as further explained below.

As the Commission has previously noted, “[s]ince the default contract reporting level is strict and set at 25, its application to some newly listed contracts is (on occasion) inefficient from a regulatory surveillance perspective.”

In proposing to establish a separate reporting level applicable to Covered Event Contracts, the Commission is mindful of the burden associated with reporting requirements and reviews them with an eye to streamlining that burden to the extent compatible with its responsibilities for rigorous surveillance applicable to the commodity options markets.

17 CFR 15.03.

The Commission also proposed to remove the “Hedge Street Products” reporting level, as no DCM currently does business under that name.

See

71 FR at 37810.

69 FR at 76393.

Given the variety of currently-listed contracts that may be covered by proposed § 16.03(a), the Commission believes it is impractical to establish a common reporting level intended to capture 70 to 90 percent of open interest on any given business day. Moreover, given the significant retail participation in trading of event contracts, including the Covered Event Contracts and the relatively low contract size of such contracts, a reporting level set to capture 70 to 90 percent of open interest on any given business day could capture retail traders that would not typically be considered large traders.

This could impose an undue reporting burden on DCMs listing Covered Event Contracts and on retail traders participating on such trading. To avoid imposing such a burden, the Commission proposes a flat reporting level of 125,000 contracts with an equivalent contract size of $1.

See also

Final rules, Reporting Levels and Recordkeeping, 69 FR at 76394 (“Because of the relatively low notional value of [HedgeStreet's European-style commodity options that paid a fixed $10.00 when in the money upon expiration], the reporting levels otherwise applicable to such contracts, including the default reporting level of 25 contracts, may place an undue reporting burden on HedgeStreet and its members without substantially facilitating the Commission's objective of, and responsibility for, meaningful market surveillance.”).

For Covered Event Contracts with contract sizes other than 1 USD, the applicable reporting level would be based on the notional value equivalent to 125,000 USD. For example, for a contract with 100 USD contract size, a reporting level of 1,250 contracts would apply. Establishing a notional-equivalent reporting level will allow DCMs to list contracts in contract sizes other than 1 USD without necessitating separate rulemakings to establish appropriate reporting levels based on different contract sizes.

Based on the Commission's experience and analysis of transaction data, a reporting level representing an end-of-day position with a $125,000 notional value will exclude the vast majority of retail traders from large trader reporting for most markets and will generally capture a relatively small number of significant traders in more liquid markets, such as market makers and institutional traders.

The proposed 125,000 reporting level could result in a 97 to 99 percent reduction in the number of potentially reportable special accounts.

Based on the Commission's analysis of certain event contract markets, the Commission expects such a reporting level would still result in DCMs reporting the most liquid event contracts. For less liquid event contract markets, the Commission would expect to receive no large trader reporting.

The Commission has regulatory experience setting reporting levels for retail-focused, small-notional-value European-style options with a binary payout structure. In 2004, the Commission set a reporting level of 125,000 contracts for Hedge Street Products, which consisted of contracts that paid a maximum of $10. 69 FR at 76394. A comparable reporting level for Event Contracts (1 USD) would be 1,250,000 contracts. Based on current volumes of trade for event contracts that may be covered by proposed § 16.03(a), the Commission believes that setting a reporting level at the equivalent of $1.25 million would, for many contract markets, obviate all position reporting.

See infra section IV.6 (Cost-Benefits Considerations) for further discussion of the reporting levels impact.

The Commission believes that a reporting level of 125,000 contracts is appropriate for Covered Event Contracts (1 USD), as that level will enable the Commission to receive daily position information and detailed trader-identifying information for the largest participants in Covered Event Contract markets. At the same time, that level will ensure that retail participants with relatively low notional value positions are not swept into a reporting system typically used to analyze positions of significant institutional traders and subjected to burdens to which they are not well-suited, as well as to overwhelm the Commission with less useful data.

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, including proposed § 16.03(e). The Commission requests specific comment on the following:

(7) Whether the reporting levels in proposed § 16.03(e) are appropriate for Covered Event Contracts or, if not, what reporting levels would be appropriate.

(8) Whether the Commission should publish reporting levels that vary by sub-category of Covered Event Contracts contract (for example, “Weather,” “Government Statistics,” “Economic Indicators”) rather than the uniform reporting level in proposed § 16.03(e).

F. § 16.03(e): Reportable Trading Volume Level

Section 17.01(b) of the Commission's regulations requires ownership and control reporting for accounts for which trading volume exceeds a reportable trading volume level.

Specifically, § 15.04 sets out a broadly applicable reportable trading volume level of 50 contracts,

during a single trading day, on a single reporting market that is a board of trade designated under § 5h of the CEA, in all instruments that such reporting market designates with the same product identifier (including purchases and sales, and inclusive of all expiration months).

17 CFR 17.01(b).

Since 2014, DMO has taken a series of no-action positions with respect to ownership and control reporting requirements.

See generally

CFTC Letter No. 24-14, at 1 (Sept. 25, 2024),

available at https://www.cftc.gov/csl/24-14/download (discussing history of no-action letters).

Among other things, those no-action positions provide that DMO will not recommend an enforcement action against a reporting party for failure to report a CM volume threshold account based on a reportable trading volume level of 50 contracts, provided that such reporting party reports instead based on a reportable trading volume level of 250 or more contracts per day.

See id.

at 6.

17 CFR 15.04.

The purpose of volume-based reporting, as opposed to the position-based reporting required by § 17.00(a), is to identify trading accounts based solely on their trading volume, independently of such accounts' contribution to open interest.

When establishing the 50-contract reportable trading volume level, the Commission determined such level would identify “approximately 85 percent of the trading volume in approximately 90 percent of the products sampled by the Commission” over a six-month sample period and identified “approximately one-third of the trading accounts in the sample set.”

Thus, the Commission determined the 50-contract reportable trading volume level would capture accounts responsible for the large majority of trading volume and a meaningful absolute number of trading accounts active in Commission-regulated markets.

100

The Commission concluded that identifying both accounts responsible for the majority of trading volume and a meaningful

absolute number of active trading accounts was “important in improving the Commission's ability to perform robust and comprehensive market surveillance.”

101

See

Final Rule, Ownership and Control Reports, Forms 102/102S, 40/40S, and 71, 78 FR 69178, 69192 (Nov. 18, 2013).

Id.

100

Id.

101

Id.

The Commission believes that applying a 50-contract reportable trading volume level to Covered Event Contracts would impose a disproportionate burden on market participants vis-à-vis the benefit to the Commission.

102

Given that a significant majority of Covered Event Contracts have a contract size of one dollar, a 50-contract reportable trading volume level would require the submission Form 102B for every account with a $50 trading volume. Obtaining detailed ownership and control information for accounts with $50 in trading volume is unlikely to enhance the Commission's surveillance and market monitoring functions and would impose significant burdens on market participants while overwhelming the Commission with less useful data.

102

The Commission received a comment letter to this effect in 2012.

See generally

78 FR at 69192 (discussing commenter's recommendation that the Commission apply a reportable trading volume level of 5,000 to contracts with a notional value of one thousand dollars or less).

Based on analysis of trading volumes in Covered Event Contracts, the Proposal would establish in § 15.04 a new reportable trading volume level applicable solely to Covered Event Contracts and would set that level at 125,000. The Commission estimates a reportable trading volume level of 125,000 would capture approximately 150 accounts with significant trading volume in Covered Event Contracts. This may include accounts that trade in significant volume but maintain relatively low open positions, such that the Commission would not otherwise obtain ownership and control information through large trader position reports required under § 17.00(a).

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, including proposed § 16.03(e). The Commission requests specific comment on the following:

(9) Whether the reportable trading volume level in proposed § 15.04(b) is appropriate for Covered Event Contracts or, if not, what reportable trading volume level would be appropriate. Please provide reasoning and data to support comments in response to this request for comment.

G. § 16.03(f): Real-Time Dissemination of Market Data

Reporting requirements for swap data generally require near-real-time dissemination of swap transaction and pricing data.

103

To address this requirement, the Staff Event Contract Reporting No-Action Letters condition the no-action positions granted therein on the requesting DCMs' disseminating publishing time and sales data for all transactions “promptly” after execution.

104

Proposed § 16.03(f) would codify in regulation a substantially similar requirement. Specifically, it would require DCMs to publish for each Covered Event Contract the execution timestamp, contract ticker symbol, trade quantity, and price. Rather than requiring such dissemination occur “promptly,” which is not defined in Commission regulations, proposed § 16.03(f) would require such transaction information be published “as soon as technologically practicable,” which is the standard generally applicable to dissemination of swap transaction and pricing data.

105

103

See

7 U.S.C. 2(a)(13) (requiring the Commission to promulgate regulations for real-time public reporting of swap transaction and pricing data); 17 CFR 43.3(b) (regarding public dissemination of swap transaction and pricing data by SDRs in real-time).

104

See, e.g.,

CFTC Letter No. 17-31, at 3 (June 30, 2017),

available at https://www.cftc.gov/csl/17-31/download

(“. . . Nadex publishes on its website the following time and sales data for all Nadex Contracts transactions promptly after execution thereof—business date, execution time, instrument type, periodicity, display name, expiration date, price (in USD), and volume”); CFTC Letter No. 17-32, at 4 (June 30, 2017),

available at https://www.cftc.gov/csl/17-31/download

(“CX continues to publish on its website the following information on all CX Binary Options transactions promptly after execution thereof: trade timestamp; contract; quantity; and price”); CFTC Letter No. 21-11, at 4 (Apr. 22, 2021),

available at https://www.cftc.gov/csl/21-11/download

(“Kalshi will publish on its website the following information on all Kalshi Binary Options transactions promptly after execution thereof: trade timestamp, contract, quantity, and price”).

105

See

17 CFR 43.3(b)(1) (requiring SDRs to “publicly disseminate swap transaction and pricing data as soon as technologically practicable after such data is received . . . unless such swap transaction and pricing data is subject to a time delay described in § 43.5”);

see

17 CFR 43.2(a) (defining “as soon as technologically practicable” to mean “as soon as possible, takin into consideration the prevalence, implementation, and use of technology by comparable market participants”).

The Commission believes this will harmonize the reporting of Covered Event Contracts with the current industry standard and otherwise required by the current regulations. It would create parity across DCMs listing Covered Event Contracts for trade and ensure the public has timely and equal access to market data on a consistent basis to allow market participants and the public to analyze the swap transaction and pricing data. Proposed § 16.03(f) also introduces a requirement that DCMs listing Covered Event Contracts for trade make transaction data publicly available on their website for a period of at least one year, which mirrors requirements imposed on SDRs with respect to swap transaction and pricing data.

106

See

17 CFR 43.3(c).

Additionally, proposed § 16.03(f) provides certain additional clarifications with respect to the form and manner for reporting execution timestamp, contract ticker symbol, trade quantity, and price. First, it would specify that “execution timestamp” should be provided in the form and manner applicable to the “Event Timestamp” data element in appendix A to part 43 of the Commission's regulations.

107

That format currently is YYYY-MM-DDThh:mm:ssZ, based on UTC (Coordinated Universal Time), the primary time standard globally used, with the time element required to be reported as specific as is technologically practicable. Maintaining formatting for dates in a manner consistent with those applicable to swap transaction and pricing data may facilitate combining data for Covered Event Contracts across DCMs and with other swaps for analysis or surveillance.

107

The form and manner for reporting data elements set out in appendix A to part 43 of the Commission's regulations is set out in a technical specification published by the Commission's Division of Data.

See

17 CFR 43.3(d)(1) (“In reporting swap transaction and pricing data to [an SDR], each reporting counterparty, swap execution facility, or designated contract market shall report the swap transaction and pricing data as described in the elements in appendix A of this part in the form and manner provided in the technical specification published by the Commission pursuant to § 43.7.”); 17 CFR 43.7(a)(1) (delegating authority to the Division of Data “[t]o publish the technical specification providing the form and manner for reporting and publicly disseminating the swap transaction pricing data elements in appendix A of this part . . .”). The Division of Data's current technical specification for swap reporting is available on the Commission's website.

See

CFTC Division of Data, CFTC Technical Specification version 3.3 (Dec. 13, 2023),

available at https://www.cftc.gov/media/9921/Part43_45TechnicalSpecification12132023CLEAN/download.

Second, “contract ticker symbol” should be populated with a code or symbol assigned by the DCM to identify the contract. This contract ticker symbol should, where practicable, be the symbol used as a unique instrument code (“UIC”) for purposes of part 17 reporting.

108

Use of UICs permits

linking contracts to Product Reference File data, which may reduce reporting burdens by allowing reporting parties to remove certain “static data” elements from reports.

109

108

A unique instrument code is “[a]n exchange assigned code [that] serves as a primary key for the product reference file and uniquely identifies the derivatives contract at the instrument level.”

See

Final Rule, Large Trader Reporting, 89 FR 47439, 47447 n.98 (June 3, 2024).

109

See

89 FR at 47446-47447.

Third, “trade quantity” should be populated with a number greater than or equal to zero. This requirement will ensure data disseminated by different DCMs will be interoperable.

Fourth, “price” should be populated with a numeric value expressed as a decimal. This requirement will likewise ensure data disseminated by different DCMs will be interoperable.

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, including proposed § 16.03(f). The Commission requests specific comment on the following:

(10) Whether DCMs listing Covered Event Contracts for trade should be required to publish any additional transaction data elements beyond execution timestamp, contract ticker symbol, trade quantity, and price.

H. § 16.03(g): Requirement That DCMs Obtain Trader-Identifying Information

Proposed § 16.03(g) would introduce an explicit requirement that DCMs must obtain trader-identifying data for all traders. Specifically, proposed § 16.03 would require that the DCM listing a Covered Event Contract obtain from all customers data that identifies each trader, by name, physical address, email address, phone number, occupation, and employer. Also, if persons guarantee the trading accounts of the trader or have a financial interest of 10 percent or more in the reporting trader or the trading accounts of the reporting trader, they would be required to obtain the names of such persons, for each transaction or order for the Covered Event Contract. And the DCM shall maintain such data throughout the life of the Covered Event Contract and for a period of at least five years following the final termination of the Covered Event Contract. This requirement is intended to ensure the Commission obtains trader-identifying information that would otherwise not be obtained pursuant to part 17 and § 16.02.

110

As further explained below, § 16.02 does not require submission of trader-identifying information by a DCM.

110

As noted above, in section II.E., the Commission's large trader reporting pursuant to part 17 requires reporting of information mainly by FCMs, clearing members, and foreign brokers.

Section 16.02 requires reporting markets to submit to the Commission daily trade and supporting data reports, which include “transaction-level trade data and related order information for each futures or options contract,” “time and sales data,” “reference files,” and “other information as the Commission or its designee may require.”

111

Importantly, § 16.02 requires DCMs to provide “data that identifies or facilitates identification of each trader for each transaction or order” “if the [DCM] maintains such data,”

112

and does not require DCMs to obtain such trader-identifying data. The Commission declined to require DCMs to obtain such information when promulgating § 16.02 because it determined that “DCMs do not, as a matter of routine practice, collect detailed trader-identifying data.”

113

In making that determination, the Commission relied on the fact that “all contracts on DCMs are funneled through clearing members that also are subject to the large trader reporting rules,” such that data provided pursuant to § 16.02 was not the Commission's only source of trader-identifying information.

114

111

17 CFR 16.02.

112

Id.

113

Final Rule, Significant Price Discovery Contracts on Exempt Commercial Markets, 74 FR 12178, 12185 (Mar. 23, 2009).

114

See

74 FR at 12185 n.64.

When the Commission declined to expressly require DCMs to collect trader-identifying information in 2009, it did so due to the presence of intermediation and large trader reporting requirements.

115

See id.

Today's event contract markets present different circumstances. In contrast to the DCMs registered in 2009, many of the DCMs listing contracts that would be considered Covered Event Contracts, offer non-intermediated trading or a combination of intermediated and non-intermediated trading. Moreover, the large trader reporting level the Proposal would apply is not intended to capture the vast majority of retail traders who make up a significant number of event contract traders. The effect of the proposed reporting level is to limit the ownership and control reporting for retail traders. As the Commission would not have a steady stream of trader information, the Commission's only source of trader-identifying information for these markets is § 16.02. For Covered Event Contracts, the source of information would commonly be the DCM, in particular given the large number of direct participants. The DCM's Core Principles require that the DCM have rules that provide the DCM the ability and authority to obtain any information to perform the DCM's functions.

116

Thus, DCMs are responsible for obtaining accurate information from traders. The Commission understands that DCMs listing Covered Event Contracts generally already collect trader-identifying information for both intermediated and non-intermediated customers.

116

DCM Core Principle 2, 7 U.S.C. 7(d)(2).

Accordingly, the Commission intends proposed § 16.03(g) to set forth what trader-identifying information must be collected by both current DCMs and prospective DCMs. Proposed § 16.03(g) would explicitly require DCMs listing Covered Event Contracts to obtain data for all customers that identifies each trader, by name, physical address, email address, and phone number. Additionally, proposed § 16.03(g) would require DCMs to obtain occupation and employer information. Finally, if any other persons guarantee the trading accounts of the trader or has a financial interest of 10 percent or more in the trader or the trading accounts of the trader, proposed § 16.03(g) would require DCMs to obtain the names of such persons. This mirrors the information the Commission ordinarily receives through the ownership and control reporting.

117

In traditional futures markets, the Commission obtains such information through ownership and control reporting via the large trader reporting regime.

See generally

17 CFR 17.01.

Trader-identifying information is particularly important to monitoring and surveilling the Covered Event Contracts markets. Trader-identifying information is necessary to detect insider trading and prevent wash trading.

118

Additionally, given that multiple DCMs often list economically similar contracts, obtaining trader-identifying information is necessary to conduct cross-market surveillance.

119

118

For example, absent obtaining trader-identifying information for all trading accounts, a DCM may have difficulty identifying instances where a trader with accounts carried at multiple intermediaries matches against itself.

119

Historically, liquidity for futures contracts on a particular commodity has often aggregated on a single DCM.

See, e.g.,

Final rules, Large Trader Reporting for Physical Commodity Swaps, 76 FR 43851, 43854 (July 22, 2011) (discussing enumeration of “linked contracts” by commodity and exchange); Final rule, Position Limits for Derivatives, 86 FR 3236, 3236-3237 n.2 (Jan. 14, 2021) (discussing legacy agricultural products specific to particular DCMs that “have been subject to Federal position limits for decades”). For event contracts that would be considered Covered Event Contracts under proposed § 16.03(a), multiple DCMs may list contracts on the same underlying event. For example, at least three DCMs have self-

certified event contracts that settle based on United States Gross Domestic Product growth as reported by the Bureau of Economic Analysis. Cross-platform surveillance is important with respect to such contracts in order to holistically understand traders' positions and trading with respect to a commodity traded on multiple DCMs.

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, including proposed § 16.03(g). The Commission requests specific comment on the following:

(11) What burdens, if any, would be imposed on DCMs, intermediaries, traders, or others by proposed § 16.03(g)?

(12) What additional trader-identifying information, if any, should DCMs collect to support surveillance programs?

I. § 16.03(h): Recordkeeping Obligations

Proposed § 16.03(h) would require that DCMs and DCOs reporting Covered Event Contracts comply with the recordkeeping requirements applicable to futures and options

120

rather than the recordkeeping requirements applicable to swaps, as it would allow the Commission to conduct an efficient review of the Covered Event Contracts markets, if necessary. Specifically, proposed § 16.03(h)(1) would require that, in connection with any Covered Event Contract, the listing DCM and the DCO clearing the Covered Event Contract shall comply with all applicable swap reporting and recordkeeping requirements of the CEA and Commission regulations, other than recordkeeping requirements contained in Regulation 38.8, Regulation 38.10, Regulation 38.951 (only to the extent Regulation 38.951 requires compliance with part 45), Regulation 39.20(b)(2), part 43, and part 45. Proposed § 16.03(h)(2) would also require DCMs and DCOs to keep required records open to inspection upon request by the Commission, the United States Department of Justice, or the Securities and Exchange Commission, or by any representative of a prudential regulator as authorized by the Commission. Such records are essential to carrying out the regulatory functions of not only the Commission but also the Department of Justice and other financial regulators. Furthermore, the records would form the basis for conducting appropriate risk management by Registered Entities themselves.

120

See generally

17 CFR part 38; 17 CFR 1.31.

Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in Part 16, including proposed § 16.03(h).

III. Compliance Date

Given that the Proposal largely codifies an alternative reporting regime that closely follows the Staff Event Contract Reporting No-Action Letters, the Commission believes that DCMs and DCOs already have in place the mechanisms to comply with most of these proposed requirements, therefore, the Proposal should require little to no time to implement. As a result, the Commission is setting a compliance date for the proposed rules to be 60 days following publication of a final rule in the

Federal Register

. The Commission also proposes to direct staff to withdraw the Staff Event Contract Reporting No-Action Letters on the compliance date of any final rule, as they will become superfluous at that time.

However, the Commission understands that DCMs and DCOs may require some additional time to revise systems and processes to comply with large trader reporting for the Covered Event Contracts pursuant to part 17. In addition, as discussed in section II.C above, the Commission separately amended part 17 in a rulemaking published on June 3, 2024 with a compliance date of June 3, 2026,

121

and DMO has separately published a no-action letter stating that DMO will not recommend an enforcement action against any DCM, FCM, clearing member, or foreign broker for failure to comply with those rule amendments until, effectively, July 26, 2027, in order to facilitate time for testing and implementation.

122

Because the 2024 rulemaking introduces data elements that would facilitate reporting of position data for the Covered Event Contracts, the Commission is proposing that the implementation date for proposed § 16.03(b)(1) and § 16.03(c)—or an alternative requiring that all Covered Event Contracts be reported in the manner applicable to exclusively self-cleared contracts—be the later of either (a) sixty days following publication of a final rule stemming from this notice in the

Federal Register

or (b) July 26, 2027.

121

Final Rule, 89 FR at 47439.

122

CFTC Letter No. 26-02 (Jan. 27, 2026),

available at https://www.cftc.gov/csl/26-02/download;

Press Release, CFTC Staff Issues No-Action Letter, Announces Implementation Updates to 2024 Large Trader Reporting Rule, CFTC Release No. 9174-26 (Jan. 27, 2026),

available at https://www.cftc.gov/PressRoom/PressReleases/9174-26.

General Request for Comment

The Commission requests comments on all aspects of the proposed changes to regulations in part 16, part 17, and part 15, including the proposed Compliance Date.

123

The Commission published an advance notice of proposed rulemaking (ANPRM) in the

Federal Register

on March 16, 2026, requesting comments related to prediction markets the Commission. Among other comment, the ANPRM requested comment on the reporting of event contract swaps reporting to an SDR. The Commission received comments requesting that the Commission require reporting to identify insider trading and fraud, scaled position reporting thresholds, and mandatory reporting by market participants deploying AI-driven trading strategies. Another commenter supported a regulator-mandated per-contract identifier at listing (following the CUSIP/LEI/UPI operating model). This Proposal would provide an alternative reporting under the futures and options regime with adjusted reporting level and trading volume thresholds for Covered Event Contracts. The commenters' requests are otherwise outside the scope of this Proposal.

See

Prediction Markets; Advance Notice of Proposed Rulemaking, 91 FR 12516, 12520 (Mar. 16, 2026).

IV. Related Matters

A. Cost-Benefits Considerations

1. Introduction

Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA.

124

Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations (collectively, the “section 15(a) factors”). In conducting its analysis, the Commission may, in its discretion, give greater weight to any one of the five enumerated areas of concern and may determine that, notwithstanding its costs, a particular rule is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the CEA. Although the Commission believes these rules will create meaningful benefits for market participants and the public, the Commission also recognizes associated costs. The Commission has endeavored to enumerate these costs and, when possible, assign a quantitative value to the costs reporting firms might face given the changes. Where it is not possible to reasonably quantify costs and benefits, those costs and benefits are discussed qualitatively.

124

7 U.S.C. 19(a).

2. Background

The CEA requires that swaps be reported to an SDR.

125

Part 43 and part 45 of the Commission's regulations, among other regulations, implement that requirement.

126

Additionally, the Commission's regulations require DCMs, FCMs, clearing members, foreign brokers, and traders to report various data concerning commodity options transactions and positions directly to the CFTC.

127

Covered Event Contracts as defined in proposed § 16.03(a) may fall under one or more subsections of the “swap” definition of section 1a(47)(A)(i) and/or (ii) of the CEA, and are therefore subject to being reported to SDRs pursuant to part 43 and part 45 of the Commission's regulations.

125

See

7 U.S.C. 2(a)(13)(G) (“Each swap (whether cleared or uncleared) shall be reported to a registered swap data repository.”)

126

See generally

17 CFR part 43; 17 CFR part 45.

127

See generally

17 CFR 16; 17 CFR 17; 17 CFR 18.

As discussed above, beginning in 2017, the Divisions have issued Staff Event Contract Reporting No-Action Letters to DCMs listing certain event contracts from certain swap reporting and recordkeeping requirements.

128

Specifically, these staff no-action letters inform registrants that the Divisions will not recommend the Commission enforce SDR reporting requirements for specific contracts. Currently, consistent with conditions enumerated in the Staff Event Contract Reporting No-Action Letters, DCMs listing event contracts provide reports pursuant to §§ 16.01 and 16.02 of the Commission's regulations, which provides the Commission with market-level data on volume and open interest, and detailed information on transactions on a daily basis.

129

128

See supra

note 28.

129

Regulations 16.00 and 16.01 were not specifically included in the Staff Event Contract Reporting No-Action Letters, but they were still required to be followed under the Staff Event Contract Reporting No-Action Letters and the Commission has always received information under these provisions.

The number of DCMs listing Covered Event Contracts and the volume of trading in such contracts have increased significantly in recent years. Currently twelve DCMs either offer or have stated an intention to offer contracts that would likely be Covered Event Contracts. The Commission notes it has designated seven new DCMs since the beginning of 2025, and that currently more than twenty DCM applications are pending.

130

Many of these pending DCM applications have the stated intention of offering contracts that could be considered Covered Event Contracts. In one of the largest DCMs during the calendar month February 2026, the Commission estimated a daily average of approximately 91,000 event contracts with trading volume. The Commission's experience is that entities seeking DCM designation and seeking to list Covered Event Contracts may wish to receive a staff no-action letter similar to the Staff Event Contract Reporting No-Action Letters. The Commission anticipates receiving additional similar requests in the future.

130

See

CFTC, Designated Contract Markets,

https://www.cftc.gov/IndustryOversight/IndustryFilings/TradingOrganizations

(last visited May 22, 2026).

Request letters resulting in the Staff Event Contract Reporting No-Action Letters have generally argued that the contracts for which they seek a no-action position with respect to reporting are economically quite different from the vast majority of the swaps reported under part 43 and part 45. Swaps reported pursuant to part 43 and part 45 typically have large notional values, long tenors, and are typically margined. Traditionally, swaps reported pursuant to Commission regulations are in some instances standardized, but the potential and observed scope of contract customization between a SD and a bilateral counterparty is large. Swaps may or may not be cleared with a central counterparty, may include complex economic terms such as schedules of payments or reference quantities of underlying instruments, and they may contain substantial embedded optionality. Swap market participants often modify their portfolio exposure by initiating new swaps in order to adjust the risk profile of their portfolio, as it is often impractical or impossible to identify and terminate specific swaps that would achieve the desired risk profile.

In contrast, Covered Event Contracts and their associated portfolio transactions are much simpler than the possible range of swaps contemplated in part 43 and part 45 regulations.

131

Covered Event Contracts are cleared, standardized, typically have a $1 payoff per contract, and are often resolved soon after contract initiation. Because Covered Event Contracts are standardized, market participants can readily offset a position in a given contract by trading again in that same contract. Also, whereas futures and options on futures typically trade on DCMs that allow for leveraged positions, Covered Event Contracts would be fully collateralized.

132

Thus, for intermediated trades of Covered Event Contracts, FCMs and brokers do not hold margin, and users are not subject to margin calls. Consequently, Covered Event Contracts carry different risks than traditional futures or options contracts. Specifically, trading in fully collateralized contracts should not generally expose the DCO to credit or default risk.

133

131

Part 45 reporting was designed to accommodate complex, bespoke, bilateral swaps, not exchanged-traded options. As such, it includes many fields that are not relevant for Covered Event Contracts including items such as CDS index attachment point, Exchange rate, Exchange Rate Basis, Floating rate payment frequency period multiplier, Original swap USI, Physical delivery location, among many others.

132

17 CFR 39.2 (“

Fully collateralized position

means a contract cleared by a derivatives clearing organization that requires the derivatives clearing organization to hold, at all times, funds in the form of the required payment sufficient to cover the maximum possible loss that a party or counterparty could incur upon liquidation or expiration of the contract.”).

133

See, e.g.,

Final Rule, Reporting and Information Requirements for Derivatives Clearing Organizations, 88 FR 53664, 53664 (Aug. 8, 2023) (“[F]ully collateralized positions do not expose the DCO to any credit or default risk stemming from the inability of a clearing member to meet a margin call or a call for additional capital.”).

As noted earlier, reliance on Staff Event Contract Reporting No-Action Letters without a reporting and recordkeeping regime for the Covered Event Contracts is a tenuous basis to devote resources and may cause reporting parties to proceed cautiously in launching new products, thereby inhibiting innovation. Accordingly, the Commission is proposing an alternative reporting regime for Covered Event Contracts. The Proposal would set forth a separate reporting regime for Covered Event Contracts, which would be exempted from certain swap data reporting and recordkeeping requirements. Rather than being subject to swap data reporting requirements, event contracts that would be considered Covered Event Contracts under proposed § 16.03(a) would be reported pursuant to part 16, part 17, and part 18, in largely the same manner as futures and options contracts are reported.

3. The Baseline

The Commission identifies and considers the benefits and costs of the Proposed Rule relative to the baseline of those generated by the current statutory and regulatory framework applicable to the issues addressed by this Proposal,

i.e.,

the current status quo. The baseline in this Proposal is the existing statutory and regulatory framework applicable to market participants that must comply with the existing swap reporting rules. Covered Event Contracts' treatment as swaps means that Registered Entities are required to report transaction information under parts 43 and 45. Part

43 implements rules relating to the reporting and public dissemination of certain swap transaction and pricing data in near real time. Part 45 regulations require SEFs, DCMs, and reporting counterparties to report swap data to SDRs. SDRs collect and maintain data related to swap transactions, keeping such data electronically available for regulators or the public.

The Proposal would remove these part 43 and part 45 requirements for the Covered Event Contracts and would set up an alternative reporting regime under part 16, part 17, and part 18 of the Commission's regulations. Part 16 concerns requirements for reporting trade information for futures and options. In particular, § 16.02 requires price and quantity information similar to that required under part 43. Part 17 requires reporting position and ownership and control information for accounts identified as special accounts under Commission regulations, and part 18 requires reporting certain trader-identifying information upon a special call. The Proposal would amend both the reporting level and reportable trading volume level for purposes of part 17 and part 18 to raise both thresholds to 125,000 contracts for Covered Event Contracts.

134

The proposed reporting level is 125,000 contracts for Covered Event Contracts with a $1 maximum payout. For those that have a higher payout, the threshold is $125,000 notional.

The Staff Event Contract Reporting No-Action Letters set forth no-action positions by the Divisions that provide for reporting of Covered Event Contracts by Registered Entities under the futures and options regulatory regime. The Staff No-Action Letters are not Commission actions carrying the force of law and thus do not establish any regulations. Although costs and benefits are calculated based on the regulatory baseline, the Commission recognizes a de facto baseline for Registered Entities that have relied on these Staff Event Contract Reporting No-Action Letters and submit Covered Event Contract information to the Commission pursuant to the futures and options reporting regime of part 16 of the Commission regulations. Because the Staff No-Action Letters have effectively lowered the compliance burden relative to the swaps reporting regulatory baseline for many participants, complying with a reversion to the regulatory baseline would result in new costs. For existing Registered Entities submitting information pursuant to a Staff No-Action Letter, the actual costs and benefits of the amendments in this Proposal may net out to little, if any, change in those cases where the Proposal would establish regulations requiring reporting in a format and timeframe that closely align with the existing Staff Event Contract Reporting No-Action Letters. For New Registered Entities not currently relying on a Staff Event Contract Reporting No-Action Letter, the regulatory and de facto baselines would similarly apply to the extent new entities would avail themselves of a staff no-action letter for their Covered Event Contracts.

When comparing the Proposal to the baseline, where possible the Commission has engaged in a quantitative analysis; however, where data is unavailable or estimates depend on the cost structure and business model of the registrant, the Commission has addressed these costs and benefits on a qualitative basis. In conducting the cost-benefit analysis, the Commission has considered more and less stringent alternatives in addition to the preferred option set forth in the Proposal. As discussed below, the Commission has identified the alternative of proceeding with the current regulations which requires reporting under the swaps reporting and recordkeeping regulations (in addition to the options reporting requirements), the alternative of requiring reporting under current regulations absent no-action relief, reporting under the options regime with the default (25-contract position/50-contract volume) threshold, reporting to an SDR only (

i.e.,

retaining the parts 43 and 45 requirement, but not the parts 16, 17 and 18), and the alternative of a DCM choosing to register as an SDR or registering an affiliated SDR, and the chosen Proposal. Based on our preliminary analysis, the Commission believes the Proposal detailed above is likely to yield the greatest net benefit among these options.

Broadly summarizing the economic analysis described in more detail in the following sections, the Commission preliminarily concludes that there are significant sources of net benefit associated with both the proposed changes that eliminate swap reporting for Covered Event Contracts, as well as proposed changes to the reporting under existing regulations for large trader reporting levels. By eliminating part 43 and part 45 SDR reporting requirements as well as certain parts 38 and 39 recordkeeping and reporting requirements for the Covered Event Contracts, the Proposal would eliminate the costs of swap reporting for Covered Event Contracts. The Proposal would also reduce costs by substantially raising the threshold for special account and volume threshold account status for accounts held by traders from a position of 25 contracts or a daily volume of 50 contracts to a proposed level of 125,000 contracts of position or volume to meet the reporting threshold, thereby eliminating DCM, FCM, and trader reporting requirements associated with special accounts. Costs associated with the Proposal include those for a DCM to collect and transmit basic identifying information, not previously required, on all traders. For instance, the Proposal would require occupation information that would be relevant for Commission surveillance programs of Covered Event Contracts. However, the Commission preliminarily believes that these costs would be offset by the elimination of the swap data reporting and the increase in the reporting level thresholds.

4. Proposed Codification of the No-Action Position With Respect to SDR Reporting and Recordkeeping Requirements

Proposed § 16.03(a) would exempt Covered Event Contracts from regulations requiring reporting to the SDRs for the DCMs that list these contracts. Although the transaction-level reporting requirements found under these rules are typically required for swaps, the Commission notes that Covered Event Contracts differ from many other swaps in that Covered Event Contracts (a) are standardized and listed on DCMs; (b) are fully collateralized; (c) have significant retail participation and typically trade as one-dollar contracts. In requests for no-action positions, certain DCMs represented that it would be impractical and uneconomic to report small-notional-size swaps to an SDR.

In lieu of receiving transaction data via SDR reporting, pursuant to the Proposal, the Commission would receive transaction data directly pursuant to §§ 16.00, 16.01 and 16.02, which apply to futures and options transactions. The Commission believes that the transaction-level reporting under these sections would provide a suitable record for the Commission's purposes for most transactions when combined with additional reporting for large traders. The Commission has extensive experience with the part 16 data format as a tool for market monitoring, market analysis, and surveillance. Given the economic similarities between event contracts that would be considered Covered Event Contracts and options for which the Commission typically receives transaction data, and given the Commission's nearly nine years of experience receiving transaction data for event contracts in the part 16 format, the

Commission believes this format is sufficient to obtain the transaction information necessary to support the Commission's mission.

a. Benefits

Under the Proposal, § 16.03(a) defines the “Covered Event Contracts” which will not be subject to reporting and recordkeeping requirements under §§ 38.8, 38.10, 38.951, 39.20(b)(2), and part 43 and part 45. By reducing reporting and recordkeeping requirements from the regulatory baseline, the Proposal would benefit the reporting parties by enabling them to avoid certain reporting costs. The Commission believes the costs avoided by not subjecting DCMs to the above-cited swap reporting and recordkeeping requirements fall into at least three categories: (1) costs associated with registering with and connecting to an SDR, (2) costs associated with modifying reporting party systems, and (3) costs associated with SDR reporting fees. Under the regulatory baseline, DCMs currently trading other event contracts and swaps in addition to Covered Event Contracts would have already connected to an SDR and hence would not incur costs in the first two categories. In addition, those Registered Entities that are already connected to an SDR to report data on their traditional swap business but choose to start listing Covered Event Contracts would also not incur costs in these categories.

First, with respect to costs associated with registering with and connecting to an SDR, the Commission estimates avoided costs would vary across SDRs. Costs to DCMs and other market participants may include legal costs associated with completing user agreements and registration fees associated with receiving an LEI. Such costs may also include the cost of building a connection to an SDR. The Commission acknowledges that these costs might change over time. A DCM listing contracts that would be considered Covered Event Contracts, or a DCO clearing the same, might make a business decision to register as an SDR or open an affiliate SDR. In the short term, any such cost reduction might be offset by costs associated with registering with the Commission as an SDR and setting up reporting systems. This is discussed in more detail below.

Second, with respect to the costs associated with modifying reporting systems to submit data in the form and manner required by an SDR, the Commission previously estimated the cost for a reporting entity to design, test, and implement an updated data system based on the part 45 data elements, the Commission's technical specification, and applicable validation requirements would range between $24,000 and $73,225 per reporting party to modify systems, plus an hourly burden of 0.01 hours per report submitted.

135

See

Final Rule, Swap Data Recordkeeping and Reporting Requirements, 85 FR 75503, 75553 (Nov. 25, 2020).

see also

Final Rule, Significant Price Discovery Contracts on Exempt Commercial Markets, 74 FR 12178, 12185 (Mar. 23, 2009).

149

As discussed in section II.H above, trader-identifying information is valuable to both the Commission and to DCMs for market monitoring and surveillance purposes.

See, e.g.,

CFTC Press Release, “CFTC Enforcement Division Issues Prediction Markets Advisory,” Release No. 9185-26 (Feb. 25, 2026),

available at https://www.cftc.gov/PressRoom/PressReleases/9185-26

(discussing “[m]isappropriation of confidential information in breach of a pre-existing duty of trust and confidence to the source of the information (commonly known as `insider trading'),” among other potential “illegal trading practices occurring on any DCM”).

b. Costs

Under the regulatory and de facto baselines, DCMs are responsible for reporting clearing member reports under § 16.00, market data under § 16.01 and transaction data pursuant to § 16.02. The Proposal would establish additional requirements for the Covered Event Contracts, including requirements to record contract settlement information, to obtain certain trader-identifying information, and to publicly disseminate trade data on an “as soon as technologically practicable” basis, as well as recordkeeping requirements. As enumerated below, these additional requirements could result in some costs for registrants compared to the de facto baseline, as they would have to build out current systems to obtain this data. The Commission is of the view that this information is generally required to be collected under the regulatory baseline, and, in practice, such costs would be marginal, to the extent DCMs already have the infrastructure to collect and report futures and options data pursuant to part 16.

(i) Transmission of Settlement File Under § 16.01

Proposed § 16.03(b) would specify that § 16.01 reports must include certain settlement information, including whether the event that is the subject of each contract occurred and, if so, the event that occurred, the time and date the event occurred, and the source used to determine whether the event occurred. Such information is a necessary component of the settlement price reported by DCMs pursuant to § 16.01(b)(2)(ii). This information is currently transmitted to the Commission generally on a monthly basis by DCMs. While DCMs currently have this information available for contract determination, dispute, and settlement, the Commission acknowledges that there may be minor modifications to current internal systems to send the information on a daily basis, and ongoing costs associated with daily transmissions that adhere to the correct fields and formats requested. The Commissison preliminarily believes that DCMs would incur a one-time cost of 50 hours to update electronic systems to transmit settlement file information along with market data, and an ongoing cost of 2 hours per month to ensure the smooth transmission of this information and to resolve any errors or inconsistencies in said transmission. At an hourly rate of $235 per hour, this equates to a one-time cost of $11,750 and an ongoing annual cost of $5,640.

150

Across the 12 DCMs that are currently registered and have started trading or stated an intent to trade Covered Event Contracts, that amounts to a one-time cost of $141,000 and an ongoing cost of $67,680 per year.

150

The wage estimate of $235/hour is based on the occupational categories that are most likely to be involved in the implementation of this Proposed Rulemaking. The Commission is using a composite wage based on the following BLS categories: Software and Web Developers, Programmers, and Testers (50%), Database and Network Administrators and Architects (25%), Lawyers (25%), with wage estimates taken from the BLS' Occupational Employment and Wage Statistics (located online at

https://data.bls.gov/oes/#/industry/523000

); adjusted for inflation to May 2026 using the BLS CPI inflation calculator (located online at

https://www.bls.gov/data/inflation_calculator.htm

); and further adjusted with a multiple of 2.5 to account for benefits and overhead costs.

(ii) Requirement of Real-Time Reporting

Under proposed § 16.03(f), DCMs are required to publish for each transaction certain information, including the quantity and price, “as soon as technologically practicable.”

151

This standard differs from “promptly,” which was the standard established in the Staff Event Contract Reporting No-Action Letters. The Proposal would be adopting the current publication standard and the costs of the Proposal should not increase as compared to the current practice. Furthermore, the Commission does not believe the Proposed Rule would impose additional burdens on DCMs to disseminate data “as soon as technologically practicable” rather than “promptly.” In either standard, the reporting party would need to publish the information in such a way that it should be readily available. In addition, the Proposal would establish the fields that must be

reported and for how long they must be made publicly available,

152

which would create parity among DCMs and standardize the information received by the Commission and the public. In general, the Commission believes that most DCMs would not have to make any changes to the way that this information is currently disseminated, and any changes would be relatively minor. As a result, the Commission estimates that the burden required to fulfill this requirement would be

de minimis

for most reporting parties.

151

See

see

152

For instance, proposed § 16.03(f) requires that trade information be publicly available on the DCMs' website for a period of at least one year. Similarly, § 43.3(c)(1) requires SDRs to “make swap transaction and pricing data available on their websites for a period of time that is at least one year after the initial public dissemination of such data and shall make instructions freely available on their websites on how to download, save, and search such data.” 17 CFR 43.3(c)(1).

(iii) Collection of Ownership Information by Intermediaries

Proposed § 16.03(g) would require DCMs to obtain trader-identifying information for all traders, including occupation and employer information. This would allow for transaction information reported pursuant to § 16.02 to contain trade ownership information. Currently, for non-intermediated contracts that would be considered Covered Event Contracts, DCMs obtain most of such information directly from their customers. In those instances, the Proposal would standardize the minimum information required to be collected. For intermediated contracts, DCMs must generally obtain trader-identifying information as well as any other account information from the intermediary that carries the account, and as noted above, the Commission understands that DCMs generally collect such information from FCMs. However, proposed § 16.03(g) would require DCMs that do not collect trader-identifying information or collect only some of the trader-identifying information to collect the enumerated information set forth in proposed § 16.03(g). For these DCMs, there may be some costs associated with the collection and transmission of this information. But this information is required to be reported in connection with the Commission's large trader reporting scheme,

153

intermediaries collect this information about certain traders, and the electronic systems maintained by FCMs and foreign brokers to place trades may accommodate any additional information requested. As a result, as in the case of real-time reporting, the Commission estimates that the cost to update information flows to fulfill requirements under proposed § 16.03(g) will be

de minimis

for most reporting parties. Similarly, proposed § 16.03(h), Registered Entities trading and clearing Covered Event Contracts would be required to comply with all recordkeeping requirements of the CEA pursuant to § 1.31 of the Commission regulations that these entities are already required to comply. The Staff Event Contract Reporting No-Action Letters and the Proposal do not remove the general recordkeeping requirements that apply to DCMs under § 1.31. As a result, DCMs offering event contracts would continue to be subject to the requirements under § 1.31 that apply to all DCMs. Because DCMs already comply with this requirement, the Commission preliminarily believes that the Proposal would not create any additional costs.

153

See, e.g.,

17 CFR 17, appendix A (Form 102); 17 CFR 18, appendix A (Form 40).

6. Large Trader Reporting Requirements

Proposed § 16.03(c) and § 16.03(e) would explicitly require large trader reporting pursuant to part 17 of the Commission's regulation for Covered Event Contract positions. The Staff Event Contract Reporting No-Action Letters do not address part 17 reporting requirements for either daily position data or ownership and control information. Commission regulations nevertheless generally require such reports for futures and options traded on DCMs.

154

The Proposal would make explicit that DCMs, clearing members, and foreign brokers must provide large trader reporting under part 17 and would establish a reporting level and a reportable volume threshold level applicable to Covered Event Contracts.

154

See

Regulation 15.00(o) defines “option” to mean, “unless specifically provided otherwise . . . any contract for the purchase or sale of a commodity option that is executed on or subject to the rules of a reporting market, including all agreements, contracts and transactions that are treated by a clearing organization as fungible with such contracts.” 17 CFR 15.00(o). Regulation 17.00(a) applies to “put and call options” traded on DCMs. 17 CFR 17.00(a).

Section 17.00(a) requires reporting markets, FCMs, clearing members, and foreign brokers to submit large trader position reports for “special accounts,”

155

which are accounts with a daily position that exceeds the applicable reporting level established in § 15.03.

156

Section 17.01(a) requires submission of Form 102, which provides certain ownership and control information, for such special accounts.

157

Section 17.01(b) requires submission of Form 102 for volume threshold accounts, which are trading accounts that carry reportable trading volume.

158

Reportable trading volume levels are enumerated in § 15.04. Pursuant to § 18.04, the Commission or its designee may, in its discretion, request additional information from traders of special accounts or volume threshold reportable accounts by special call.

159

155

17 CFR 17.00(a).

156

See

17 CFR 15.00(f) (defining “special account” as “any commodity futures or option account in which there is a reportable position”); 17 CFR 15.00(p)(1)(ii) (defining a “reportable position” as “any open contract position that at the close of the market on any business day equals or exceeds the quantity specified in § 15.03 in . . . [l]ong or short put or call commodity options that have identical expirations and exercise into the same commodity, on any one reporting market”); 17 CFR 15.03 (enumerating reporting levels).

157

17 CFR 17.01(a).

158

17 CFR 17.01(b); 17 CFR 15.00(x) (defining volume threshold account).

159

17 CFR 18.00.

The Proposal would amend the reportable positions and trading volume applicable solely to Covered Event Contracts. It would establish a § 15.03 reporting level of 125,000 1 USD contracts (or the equivalent notional value with a contract size other than 1 USD) and a § 15.04 reportable volume threshold level of $125,000 in transactions during a single trading day on a single reporting market. The Commission assesses the benefits and costs of proposed §§ 16.03(c) and 16.03(e) by comparing these proposed levels with the baseline of a currently applicable reporting level of 25 contracts position

160

and a reportable volume threshold level of 50 transactions during a single trading day on a single reporting market.

161

160

17 CFR 15.03(b) (the “other commodity” reporting level is 25 contracts).

161

17 CFR 15.04. The Commission notes that, in practice, market participants typically apply a reportable volume threshold level of 250 contracts, consistent with the staff no-action position taken by DMO in CFTC Letter No. 24-14 and preceding no-action letters.

See

CFTC Letter No. 24-14, at 6 (Sept. 25, 2024),

available at https://www.cftc.gov/csl/24-14/download

(“. . . DMO will not recommend that the Commission commence an enforcement action, during the extended period defined in this letter, against a Reporting Party relying on this no-action position for failure to report a DCM volume threshold account based on a reportable trading volume level of 50 contracts, provided that such Reporting Party reports instead based on a reportable trading volume level of 250 or more contracts per day.”).

In establishing the new reporting threshold, the Commission examined the number of event contracts with open interest or volume large enough to potentially trigger a reportable position under both the current reporting thresholds (25 event contracts for position and 50 event contracts for volume) and the proposed position and volume thresholds of 125,000 event

contracts. In the analysis that follows, an “event contract” refers to a specific individual contract, and unlike traditional futures—where reportable positions are determined by aggregating traders' positions on a DCM across all expiry months for a given underlying asset and contract size—each event contract is considered on its own.

Exhibit 1—Number of Contract Markets Above Certain Volume and Open Interest Thresholds for DCM A

Date

Number of covered event contracts

Above 125,000

(OI)

Above 125,000

(vol)

Above 25 (OI)

or 50

(volume)

Positive volume

or open interest

2/4/2026

514

370

70,224

90,249

2/8/2026

442

600

199,141

226,738

2/11/2026

440

383

79,970

102,718

2/15/2026

473

455

44,563

57,596

Exhibit 1 reflects open interest and transaction data reported by a DCM (“DCM A”) listing event contracts. Exhibit 1 demonstrates that, at one large DCM, the overwhelming majority of event contracts lack sufficient open interest to contain any reportable positions under the proposed § 16.03(e) reporting threshold. In total, no more than roughly 1,000 event contracts have either open interest or volume exceeding the proposed reporting levels, and only a subset of those markets would, in practice, have participants with positions or trading activity above those thresholds. In contrast, under the current effective 25-contract position reporting level, there would be tens of thousands of contract markets with reportable positions. The proposed $125,000 reporting level could result in a 97 to 99 percent reduction in the number of potentially reportable special accounts, based on the dates examined in Exhibit 1. Further discussion of the effect of the increase in reporting thresholds follows below.

Exhibit 2—Retail Market Coverage in the CFTC Commitment of Traders Report

[February 10, 2026]

Futures contract

Number of

reportable

traders

Reportable positions

as percent of

open interest

Long

Short

MICRO E-MINI DJIA

37.6

55.9

MICRO E-MINI S&P 500 INDEX

64.5

31.2

MICRO E-MINI NASDAQ-100 INDEX

62.5

66.3

MICRO E-MINI RUSSELL 2000 INDEX

72.5

10.8

MICRO BITCOIN

236

77.2

90.9

MICRO ETHER

302

97.2

99.5

MICRO SOL

78.4

87.3

MICRO GOLD

43.0

60.3

MICRO COPPER

29.7

87.3

Although each derivatives market is different and the Commission receives varying information based on the size of the market, the reporting levels, the number of traders, and trader behavior, a comparison with other retail futures contract markets is instructive for analysis of markets for event contracts that would be considered Covered Event Contracts. Exhibit 2 shows several active event contracts by a significant number of retail traders. Reportable positions in these contracts cover between 10.8 and 99.5 percent of the short side, and 29.7 to 97.2 percent of the long side.

Exhibit 3—Effect of Reporting Thresholds on DCMs A-D on February 8, 2026

Threshold

Number of participants above threshold

Position

Volume

Either

1,143,270

857,002

1,184,165

50,000

1,103

739

1,362

125,000

312

227

402

250,000

152

117

197

The Commission currently receives transaction data on Covered Event Contracts under § 16.02, which it used to construct Exhibit 3. Exhibit 3 presents the Commission's estimate of the number of unique traders at DCM A whose positions or daily trading volume exceeded various reporting thresholds on February 8, 2026. A trader is counted once even if they exceed a threshold in multiple markets. February 8 is a high-volume trading day, making it a useful reference point for assessing the potential scope of reporting activity.

The estimates include all event contracts expected to be active on February 8, 2026. The analysis is conducted at the event contract level—the most granular level at which contracts are listed and traded on DCM A. For event contracts that continue trading beyond that date, positions are measured as of the end of the calendar day; for those that expired earlier on February 8, positions are measured as of their last trading time.

As shown in Exhibit 3, higher reporting thresholds substantially reduce the number of traders who would trigger reporting. Increasing the threshold from 50,000 to 250,000 event contracts lowers the number of traders above the position- or volume-based threshold—from roughly 1,360 to about 200—for whom DCMs would be required to submit Form 102s.

Although the number of reportable traders decreases significantly at higher thresholds, the Commission would still obtain substantial information about large traders, comparable to what it receives in other derivatives markets. For instance, on February 8, the 125,000 contract position threshold would cover approximately 14 percent of the long side, and 72 percent of the short side of the top 50 Covered Event Contract markets on the largest DCM, ranked by open interest. Lowering the reporting threshold to 50,000 contracts would increase coverage to 22 and 81 percent, respectively, increasing the number of reportable positions for a relatively small increase in coverage. While a low threshold would increase the coverage to at least 99 percent of open positions, as shown in Exhibit 3 above, this would substantially increase the reporting burden on DCMs, FCMs, brokers, and traders through increased numbers of forms 102 and 40.

a. Benefits

The Commission believes that, in general, the DCMs, FCMs, clearing members, foreign brokers, and traders responsible for large trader reporting under part 17 and part 18 would see a decreased burden relative to baseline due to the significantly higher reporting level and reportable volume threshold level the Proposal would establish, which would result in a corresponding lower level of large traders. Moreover, the reporting level and reportable volume threshold level the Proposal would establish are designed to be sufficiently high to exclude the vast majority of retail traders from large trader reporting regime.

162

See supra

Exhibit 2.

Under the existing regulations, the threshold for determining when a trader is considered large is either a position of 25 contracts

163

or 50 daily trades.

164

The Proposal would raise the reporting level for § 17.00(a) reporting to 125,000 contracts (or the $125,000 notional value equivalent for contracts with contract sizes other 1 USD). It would also raise the § 17.01(b) reportable trading volume for a given contract market to daily trading volume of 125,000 contracts. Accordingly, under the Proposal, far fewer traders would qualify as large traders and therefore be subject to part 17 reporting. Based on data analysis of Exhibit 3, applying the proposed § 16.03(e) reporting levels would reduce the number of accounts with reportable positions by more than 1 million. Applying the estimate of 0.33 burden hours per form, this equates to at least 330,000 hours in cost savings.

165

This reduced burden may encourage additional traders to participate in event contract markets (or, put differently, would not discourage such additional participants), and hence the change could make some event contracts viable. Additionally, applying an elevated reporting level would ensure that limited, if any, retail traders are required to submit Form 40 in response to a special call issued pursuant to § 18.00.

166

163

17 CFR 15.03(b) (reporting level of 25 contracts applicable to “All Other Commodities”).

164

17 CFR 15.04. The nominal value of contracts varies widely. For instance, on CME, a micro bitcoin contract is one-tenth the value of one bitcoin or $7,700 on May 18th, 2026. A WTI contract is 1,000 barrels of oil, or $102,000.

165

See infra

note 224, section IV. C.

166

17 CFR 18.00.

DCMs, FCMs, clearing members, and foreign brokers incur costs related to collecting information on large traders and transmitting that information to the Commission. The Commission has previously estimated the average burden hours per respondent for reporting large trader position information pursuant to § 17.00(a) as 52 hours per respondent.

167

The Commission has previously estimated the average burden hours per respondent for submitting ownership and control information required by § 17.01(a) and trader information required by § 18.04 to be approximately 104 hours per reporting party.

168

Although the Commission believes that much of this information collection will be automated, raising the applicable reporting levels will result in market participants submitting fewer large trader reports, Forms 102, and Forms 40 to the Commission. Hence, the Proposal would result in a reduced burden relative to baseline for DCMs, FCMs, and foreign brokers. Additionally, the Proposal would require the Commission to process fewer Form 102s than the baseline, which would consequently decrease the amount of time spent by registrants and traders waiting for clarification and error resolution.

167

See

ICR Ref. No. 202402-3038-002 (concluded July 24, 2024).

168

See

ICR Ref. No. 202308-3038-002 (concluded Dec. 21, 2023).

b. Costs

As a general matter, raising the threshold to eliminate the reporting requirement for retail traders is unlikely to reduce the Commission's ability to detect manipulation and similar behavior. The Commission recognizes that while DCMs are required to collect information on the employment and occupation of all traders under the Proposed Rule, there is not an automatic mechanism similar to Forms 102A and 102B to transmit this information to the Commission. Consequently, while the Commission will receive information on the natural persons who own or control each of the trading accounts below the revised reporting level, the information received will be less complete than under the regulatory baseline. But, as detailed above, the Commission preliminarily believes that it will be sufficient for monitoring and surveillance purposes.

Proposed § 17.00(j) and § 17.02(f) would also set forth which entities are responsible for submitting large trader position reports pursuant to § 17.00(a) and ownership and control reporting pursuant to § 17.01(f). Specifically, the Proposal would require that DCMs must provide large trader reporting on behalf of non-intermediated clearing members for contracts for which both intermediated and non-intermediated participants may trade. This is a new burden on DCMs relative to de facto baseline.

169

However, the Commission does not believe this new burden will impose significant costs on DCMs, given that DCMs are independently required to maintain position information on large traders for monitoring and surveillance purposes.

170

169

Pursuant to current regulations, DCMs must submit large trader reporting on behalf of clearing members for exclusively self-cleared contracts, defined as “cleared contract[s] for which no persons, other than a reporting market and its clearing organization, are permitted to accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trade.” 17 CFR 15.00(h).

170

See, e.g.,

17 CFR 38.254(b) (“A designated contract market with pa

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.