The Commodity Futures Trading Commission (CFTC) has issued a no-action letter allowing passive software providers to offer access to regulated derivatives without registering as introducing brokers. This guidance applies to developers of wallets and trading applications that connect users directly to registered derivatives markets.
Under the new policy, software providers are exempt from broker registration requirements provided they limit their activities to front-end functions. These include displaying market data, product offerings, and position information, as well as submitting orders for event and perpetual contracts to registered entities.
To qualify for this relief, providers must adhere to specific conditions, including mandatory user disclosures regarding fees, conflicts of interest, and relationships with registered entities. Companies must also maintain strict marketing policies, recordkeeping, and provide notices regarding insolvency or bankruptcy.
This decision extends the relief previously granted to Phantom Technologies in March. The agency stated that it will not recommend enforcement actions against providers that comply with these terms, aiming to clarify the regulatory status of software interfaces in the derivatives market.
