On November 5 the Commodity Futures Trading Commission told the exchanges it regulates that they cannot limit access to their markets by where in the United States a trader is located or resides. Exchanges have 30 days to end such restrictions or tell the agency why they cannot.
What the CFTC issued
The CFTC released an interpretation of Regulation 38.151(b), the rule that requires designated contract markets (DCMs) to provide “competitive, open, fair, and impartial access” to their members and to persons with trading privileges. The text says the Commission is aware that some DCMs have adopted access criteria that restrict certain event contract markets based on a prospective trader’s location or residence. Its position is that the Commodity Exchange Act and Commission regulations generally do not permit a DCM to limit access based on where an otherwise eligible participant is within the country.
The release sets two actions with the same deadline. DCMs must cease domestic geographic restrictions that violate the impartial access requirements within 30 days, or submit to the Division of Market Oversight an explanation of why compliance is not feasible. Within the same 30 days, DCMs should also ensure that the intermediaries reaching their markets are not impeding those requirements and are complying with them, or submit an explanation. The release adds that the Commission will consider the facts and circumstances of any particular case in connection with potential Commission action.
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Chairman Michael S. Selig gave the rationale in the release. “Derivatives markets must operate on a uniform basis at a national scale in order to achieve the purposes set out in the Commodity Exchange Act,” Selig, the CFTC’s chairman, said. The document is marked as approved by the Commission, subject to pre-publication technical corrections, and takes effect on publication.
Why a state line becomes a risk problem
The interpretation argues from market function. A trader who opens a position in a place where access is allowed and then travels somewhere it is restricted cannot manage that position, respond to market events or meet a margin call. The text says forced liquidations can follow, and that those can generate losses for the futures commission merchants and clearing organizations involved.
It then lists liquidity effects. Barring a state can remove market makers who are based there, which the text says introduces liquidity concerns, lowers volume, widens bid-ask spreads and raises the cost of trading for everyone. Location limits can also fragment a national pool of liquidity, which lets temporary price gaps between related contracts persist longer and leaves participants with more basis risk.
The examples are concrete. For sports contracts, the text notes that interest can be regional, such as whether a home team reaches the playoffs, so excluding the region lowers liquidity. For weather contracts, excluding a region prone to extreme weather takes away a hedge from the people exposed to it. For energy, it names producers, merchants and traders in states with substantial production and infrastructure. For elections, it says the most informed trading may come from residents of the state or locality where the vote takes place, so a residency bar can undercut the information that third parties such as media organizations read from prices.
The intermediary clause
The second 30-day action matters most to the companies between a customer and an exchange. A footnote explains that because Core Principle 2 does not allow a DCM to restrict access based on geography, DCMs must take reasonable steps to ensure that intermediaries, who must comply with DCM membership rules, do not impose geographic restrictions that violate impartial access. It ties that duty to the DCM’s obligation to detect, investigate and sanction rule violations, and to Core Principle 12, which makes exchanges responsible for protecting participants from abusive practices committed by any party, including an agent acting for a participant.
The CFTC has covered this ground before. Its October 9 rulemakings proposed to list event contracts as swaps and to exclude state-licensed casino and sportsbook wagers, and FinTech Edition argued on October 29 that prediction markets now reach brokers through the front ends they already run. The November 5 interpretation applies to those front ends too, because it covers who is allowed to trade a contract and where they may be when they do.
What it means for the finance leader
The interpretation applies to exchanges, and it reaches brokers, apps and clearing intermediaries through the exchange’s duty to police its own rules. A compliance lead at any firm that routes orders to an event-contract market has a short list to work through before the window closes.
- Find every place in the order flow that checks a customer’s state, address or device location, and record which rule each check enforces: an exchange access rule, a state requirement or the firm’s own policy.
- Ask each exchange partner, in writing, whether it intends to lift its location criteria or to file an explanation with the Division of Market Oversight, and when.
- Check the margin and liquidation path for customers who cross a restricted line while holding a position, since that is the failure the CFTC describes first.
- Ask for the exchange’s own wording on how it will judge an intermediary that keeps a location block, because the release leaves that to the facts of each case.
The interpretation addresses exchange access criteria and the intermediaries that reach those exchanges. It does not say how state gaming or securities regulators will respond to contracts that become available nationwide, and it does not address any one firm’s setup. In our reading, the tooling most affected is the location and eligibility logic that sits in front of a trade, since a location block built to follow an exchange rule loses that basis if the exchange drops the rule. Whether firms keep their own blocks as a matter of policy is a decision the text leaves open.
If the 30-day clock runs from the November 5 release, it ends on December 5. The release does not say when the 30 days start, so firms should confirm it with their exchange contacts rather than assume it.
Source: CFTC, “CFTC Issues Impartial Access Requirements Interpretation,” November 5, 2026
