CFTC Staff Grants No-Action Letter to Korea Exchange for Offer or Sale of …
The Commodity Futures Trading Commission’s Division of Market Oversight recently issued a letter stating that it will not recommend enforcement action against the Korea Exchange (KRX) for offering or selling Korea Composite Stock Price Index (KOSPI) 200 Futures Contracts and Mini KOSPI 200 Futures Contracts to individuals within the United States while the Commission reviews KRX’s request for certification of the contracts under CFTC Regulation 30.13.
The KOSPI 200 transitioned from being a broad-based security index to a narrow-based security index in February 2024. It is essential to understand that futures contracts on narrow-based security indexes fall under the joint jurisdiction of the CFTC and the Securities and Exchange Commission, while futures contracts on non-narrow-based security indexes, also known as broad-based security indexes, are under the exclusive jurisdiction of the CFTC.
The KOSPI 200 is set to move back to being a broad-based security index on February 6, 2025. The no-action position taken by DMO’s letter will become effective on that date. This development marks a significant moment for investors and those involved in trading these futures contracts.
This recent decision by the CFTC is not the first of its kind. Similar letters were issued by DMO when the KOSPI 200 was classified as a broad-based security index in both 2021 and 2022. This consistency in the approach reflects the CFTC’s commitment to ensuring oversight and compliance within the market.
Overall, this decision provides clarity and guidance for investors and market participants, indicating a well-regulated environment for trading these futures contracts. It also demonstrates the importance of regulatory oversight and compliance in the financial markets, helping to maintain integrity and fairness for all involved parties. The CFTC’s continued efforts to review and address these matters are crucial in upholding the stability and trust within the financial sector.