US CFTC to publish rule on vertically integrated models by summer, says chair By Reuters

By Carolina Mandl and Hannah Lang

BOCA RATON, Florida/WASHINGTON (Reuters) -The U.S. Commodity Futures Trading Commission plans to publish a draft rule by summer for comments about vertically integrated models in which a broker, a clearinghouse and an exchange are housed under a holding company, its chairman said Tuesday.

The rule should address “the opportunity for there to be a vertically integrated stack, but also have sufficient amount of conditions that you would have the entity walled off from other entities,” Chairman Rostin Behnam told journalists at the Futures International Association conference in Boca Raton, Florida.

In December, the CFTC voted to approve a plan from the Chicago cryptocurrency derivatives exchange and brokerage Bitnomial to also act as its own registered clearinghouse.

It marked the first time the commodities regulator had voted to allow a vertically integrated market structure.

Behnam said integrated structures have become more common, so much so that the CFTC plans to publish a draft rule by summer, open for comments and then finalize it by this time next year.

“It’s changed from being a one-off to a trend. And when it became a trend, I made the decision, ‘OK, this is going to demand or require a policy,'” the CFTC chairman said.