CFTC Expands No-Action Relief for Passive Trading Software Providers

The Commodity Futures Trading Commission (CFTC) has expanded its no-action relief policy for providers of passive trading software. This means that qualifying firms can now facilitate access to regulated derivatives markets without registering as introducing brokers.

The new framework, announced by the CFTC's Market Participants Division on Thursday, applies to software that connects users with registered futures commission merchants, introducing brokers, and designated contract markets. To be eligible, providers must remain passive, meaning they cannot hold user assets, generate buy or sell signals, or exercise discretion over order routing or execution.

The relief also requires disclosures around fees, conflicts of interest, and trading risks, as well as recordkeeping and marketing standards. Users must also remain able to access the registered trading provider independently.