Cantor Futures Exchange seeks to amend rules for restricting trading privileges

Maria Nikolova

The Exchange insists that it will exercise its authority to deny or restrict access only in instances where immediate action is necessary.

Cantor Futures Exchange, licensed as a Designated Contract Market by the US Commodity Futures Trading Commission (CFTC), is seeking to amend its rules concerning its authority to deny access to any participant or authorized trader to the exchange.

The proposed changes, outlined in a submission with the CFTC, concern CX Rule III-6 and CX Rule VII-18.

CX Rule III-6 allows the Board of Directors of the Exchange to suspend, revoke, limit, condition, restrict or qualify the trading privileges of a participant or an authorized trader if such an action is in the best interests of the Exchange. This rule is about to be removed, as CX is concerned that the rule might be misunderstood or misapplied in its broad language.

CX Rule VII-18 will be amended to make clear that any action to deny access should be taken only in cases where immediacy of such an action is vital. For instance, to address issues relating to the integrity of the operation of the Trading System. CX notes that these actions are of limited duration and may not be used to deny or limit access indefinitely. Appeal procedures will also apply in such cases.

The submission by Cantor Exchange is made just a couple of weeks after another licensed binary options exchange in the United States – North American Derivatives Exchange, Inc. (Nadex), a subsidiary of IG Group Holdings plc (LON:IGG), also filed a submission with the CFTC over proposed changes to its Rule 3.6 (Rejection of Applicant). As reported by FinanceFeeds, the changes permit Nadex to limit trading privileges in instances where, although no Rule violation that could lead to disciplinary action may have occurred, Nadex has determined that the limitation is necessary to minimize risk and protect the Exchange, the market, and/or its Members.

In its submission, Cantor Exchange noted that it “rejects any notion that it may terminate a participant’s access on an informal or discretionary basis.”

“CX exercises its summary access denial authority only in cases where immediacy of action is necessary, such access denials are of limited duration, and the access limitation operates within the larger disciplinary process, with full due process rights”, the company says.

The changes to the rules are set to come into effect on May 19, 2017.

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