Key points

  • CFTC staff will not recommend enforcement over introducing-broker registration for qualifying passive software providers that meet the letter's conditions.
  • Covered software may route user orders to registered derivatives markets but cannot hold customer assets, issue buy or sell signals, or control execution.
  • The position is staff-level, conditional and temporary until relevant CFTC rulemaking or guidance takes effect.

The U.S. Commodity Futures Trading Commission has opened a conditional route for software developers to connect users with regulated derivatives markets without registering as introducing brokers. The agency's Market Participants Division issued the no-action position on September 17, extending relief that had previously been tailored to Phantom Technologies to other providers of qualifying passive software.

Relief is broader than crypto wallets

Under Staff Letter 26-25, division staff will not recommend an enforcement action solely because a qualifying provider or its relevant personnel failed to register as an introducing broker or associated person. The position lasts until CFTC rulemaking or guidance addresses how those registration requirements apply to software developers. A footnote makes clear that eligible providers are not limited to companies building crypto-asset software.

Related reporting: Underdog sues Connecticut over sports prediction-market crackdown

The covered model is narrow. A provider may supply a front-end interface through which users review market information and send orders for CFTC-regulated derivatives directly to a designated contract market, futures commission merchant or registered introducing broker. Covered products can include event contracts, perpetual contracts and other regulated derivatives. The software can be a standalone application or an embedded feature in a wallet, but it must clearly distinguish regulated trading from other activity.

Software can connect users but cannot control trades

The provider's role must remain passive. It cannot hold or control customer assets, generate explicit buy or sell signals, or exercise discretion over how an order is routed or executed. Users must be onboarded directly by the regulated market or intermediary and must retain the ability to reach that firm without the software provider. Collateral supporting derivatives positions remains with a derivatives clearing organization or futures commission merchant, preserving the existing custodial structure.

The letter allows commercial relationships that go beyond a neutral technology license. A registered venue or intermediary may share revenue with the provider, and the provider may charge users a transaction-based fee. Providers may also market their software and promote the availability of particular derivatives contracts. Those activities are permitted only inside the letter's conditions and do not turn the relief into a general exemption from derivatives law.

Compliance obligations remain substantial

Qualifying providers must disclose their relationships with regulated firms and potential conflicts, including fees. Relevant users must receive risk disclosures, and providers must maintain records, adopt policies for compliant public communications, and avoid promotions that would require advance approval under National Futures Association rules. The provider and each participating registrant must also accept joint and several liability for violations tied to the covered activities and file written undertakings with the division.

The framework could make it easier for wallet and application developers to add access to regulated U.S. derivatives without immediately taking on the full introducing-broker registration regime. It also gives exchanges and intermediaries another distribution channel while keeping onboarding, custody and order execution within registered entities. For users, the distinction matters: the software interface may simplify access, but the regulated counterparty remains the market or intermediary behind it.

No-action is not a permanent rule

The legal certainty is limited. The letter represents the view of the Market Participants Division, not a binding decision of the full Commission. Staff can modify, suspend or withdraw the position, and materially different facts can make it unavailable. Companies must satisfy all ten conditions and file the required notices before relying on the framework. The step therefore gives developers a practical compliance route, but it does not settle the longer-term regulatory treatment of trading software.

Sources

AI-generated editorial image; not a photograph of the reported event. Prepared with AI assistance and source verification.