CFTC issues no-action letter regarding CME’s listing of event contracts

On July 22, 2025, the Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight and Division of Clearing and Risk issued a no-action letter (CFTC Letter No. 25-23) granting targeted regulatory relief to the Chicago Mercantile Exchange Inc. (CME) in connection with its offering and clearing of certain standardized binary option contracts, also referred to as “event contracts.”¹

CME, a designated contract market and a derivatives clearing organization, requested a no-action position from the CFTC with respect to certain swap data reporting and recordkeeping obligations under Parts 43 and 45 of the CFTC’s regulations because it intends to list binary options for trading. Binary options, also referred to as event contracts, provide for a payment that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence. In its request to the CFTC, CME emphasized that the no-action relief would be comparable to the no-action positions the CFTC has taken with respect to reporting similar contracts. 

The CFTC granted the no-action relief, and its letter allows CME to list and clear binary options contracts without being subject to certain swap data reporting and recordkeeping obligations under Parts 43 and 45 of the CFTC’s regulations. The CFTC agreed that the no-action relief is similar to its previous no-action positions with respect to reporting certain binary options transactions and similar transactions. However, the CFTC’s relief is conditioned on the binary options contracts meeting the following criteria: 

1. The binary options contracts must be fully margined, meaning that for each contract, CME will hold long option value for the long position holder and the full notional value for the short position holder until contract expiry, covering the maximum exposure under the position;
2. The binary options contracts must be executed and cleared solely through CME and by CME;
3. CME must publish trade data publicly on its website promptly after the trade is executed;
4. CME must provide swap-related position and transaction data directly to the CFTC;
5. CME must continue to comply with all other swap data reporting and recordkeeping requirements of the Commodity Exchange Act and the CFTC’s regulations; and
6. CME must keep all required records open to inspection by the CFTC, Department of Justice, or by any representative of a prudential regulator as authorized by the CFTC. 

The CFTC’s press release and the no-action letter are available here. 

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_{1 CFTC No-Action Letter 25-23 (July 22, 2025), available at: https://www.cftc.gov/PressRoom/PressReleases/9099-25?utm_source=govdelivery.}