CFTC Issues Guidance for How to Launch Crypto Derivatives
The U.S. Commodity Futures Trading Commission (CFTC) has issued new guidance for clearinghouses and exchanges planning to list digital currency-related derivatives products.
Published on Monday, the joint advisory from the agency’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) gives companies with “regulatory clarity” around such products.
The advisory addresses areas including market surveillance, substantial trader reporting, risk management and governance, and coordination with CFTC members, depicting them as “key areas that require particular attention.”
DRC director Mr. Brian Bussey stated the new guidance would assist market participants to develop risk management programs specifically for digital currency products, as per the release.
Mr. Brian Bussey goes on to say:
“Besides, the guidance is designed to help ensure that market participants follow appropriate governance processes concerning the launch of these products.”
According to a Report, the guidance prominently comes a week after CME group declared it was starting an ether reference rate and real-time ethereum price index in partnership with digital asset trading service Crypto Facilities.
U.K. based Crypto Facilities, which as of now provide CME Group with bitcoin and reference indices, started the first regulated ethereum futures contracts prior this month. While CME Group has not affirmed it is launching ether futures, the new reference rates hint at the possibility.
Moreover, Consensus 2018 Conference, CFTC enforcement director James McDonald told an audience that the agency is trying is attempting to avoid “hindering innovation” when it comes to regulating the digital currency and derivatives markets.
James McDonald stated:
“Our mission is to foster financially sound markets, and we understand as a regulator that needs a certain amount of flexibility in our approach.”