The CME reinforces the simple rule - you are involved in US futures trades, you accept US jurisdiction
The CME issued a market regulation notice that reinforced the simple statement above that often is met with skepticism when DCM is teaching a training class. A trader in Singapore or London may question why it is important for them to be trained in US exchange rules and disciplinary scope. The perception is that as long as they know local rules they are OK. The answer is an emphatic NO. If you trade US futures markets you are subject to US exchange rules and, by agreeing to jurisdiction, CFTC rules. And the exchange rules and investigatory processes are different.
The CME market regulation advisory notice today was very specific in its purpose:
"The same or similar provision will be adopted by all U.S. designated contract markets (“DCMs”), and results from an industry-wide effort to ensure that DCMs have full jurisdiction over such entities where a commission or fee is charged in connection with a client’s trading activities in the applicable DCM’s markets.1
There is a section of the CME Rules that is restated here even though it was adopted in 2012:
418. CONSENT TO EXCHANGE JURISDICTION Any Person initiating or executing a transaction on or subject to the Rules of the Exchange directly or through an intermediary, and any Person for whose benefit such a transaction has been initiated or executed, expressly consents to the jurisdiction of the Exchange and agrees to be bound by and comply with the Rules of the Exchange in relation to such transactions, including, but not limited to, rules requiring cooperation and participation in investigatory and disciplinary processes. Any futures commission merchant, introducing broker, associated person, or foreign Person performing a similar role that charges a commission or fee in connection with transactions on or subject to the Rules of the Exchange also expressly consent to the Exchange’s jurisdiction.
It is interesting that the exchange has felt it important that they are reaffirming that anyone collecting any fee, including foreign persons, associated with a transaction and any person for whose benefit that trade was executed must agree to exchange jurisdiction.
DCM has always stressed that the exchange contract requires acceptance of US jurisdiction - this notice is reaffirming that any person receiving benefit from the execution of a trade on a US exchange - and DCM would caution this could be interpreted to include advisors receiving a fee based on the fact a trade was executed - is subject to and required to comply with the exchange jurisdiction and to assist in disciplinary inquiries.
This reinforces the need of all individuals and entities involved in access to US futures markets should understand the US rules and train appropriate staff in US market rules.
The complete notice is here