CFTC No-Action Position for Reporting of Fully Collateralized Binary and Variable Payout Event Contracts

2 received also seek to modify previously granted no-action positions to account for subsequent modifications to orders of designation for DCMs or orders of registration for DCOs. 5 The Divisions have granted eighteen of these requests to date (the “Event Contract Reporting No￾Action Letters”). 6 These requests have followed a proliferating number of applications for DCM designation orders from entities with a stated interest in offering “event contracts” for trading. It is staff’s experience that entities seeking DCM designation and seeking to list event contracts may wish to receive a no-action position similar to no-action positions previously provided to DCMs listing event contracts. The Divisions anticipate receiving a significant number of similar requests in the future. Continuing to address these requests serially and ad hoc raises several concerns, which the Divisions discuss below. Due to the high volume of requests received to date and the anticipated receipt of additional requests, the Divisions believe that the most efficient and effective way to address the concerns raised by these requests is to issue a no-action position setting out the applicable conditions to apply consistently across all DCMs and DCOs that obtain a no-action position. To ensure uniformity going forward, this letter applies to all beneficiaries of previously￾issued no-action letters, and applies on a going-forward basis to DCMs and DCOs listing for trade fully collateralized binary payout contracts and variable payout contracts subject to the no-action position set out in this letter. In addition, the Divisions understand that the Commission may address the reporting of event contracts more broadly in a proposed rulemaking. The no-action position set out in this letter will be effective until a final rule is adopted by the Commission addressing this matter.
II. Background
The Commodity Exchange Act (“CEA”) generally requires that all swap transactions be 5 See, e.g., CFTC Letter No. 24-15 (Oct. 4, 2024), available at https://www.cftc.gov/csl/24-15/download; CFTC Letter No. 25-02 (Jan. 31, 2025), available at https://www.cftc.gov/csl/25-02/download. 6 See CFTC Letter No. 17-31 (June 30, 2017), available at https://www.cftc.gov/csl/17-31/download; CFTC Letter No. 17-32 (June 30, 2017), available at https://www.cftc.gov/csl/17-32/download; CFTC Letter No. 21-11 (Apr. 22, 2021), available at https://www.cftc.gov/csl/21-11/download; CFTC Letter No. 24-09 (July 12, 2024), available at https://www.cftc.gov/csl/24-09/download; CFTC Letter No. 24-12 (Sept. 3, 2024), available at https://www.cftc.gov/csl/24-12/download; CFTC Letter No. 24-15 (Oct. 4, 2024), available at https://www.cftc.gov/csl/24-15/download; CFTC Letter No. 25-02 (Jan. 31, 2025), available at https://www.cftc.gov/csl/25-02/download; CFTC Letter No. 25-23 (Jul. 22, 2025), available at https://www.cftc.gov/csl/25-23/download; CFTC Letter No. 25-26 (Aug. 7, 2025), available at https://www.cftc.gov/csl/25-26/download; CFTC Letter No. 25-28 (Sept. 3, 2025), available at https://www.cftc.gov/csl/25-28/download; CFTC Letter No. 25-35 (Sept. 30, 2025), available at https://www.cftc.gov/csl/25-35/download; CFTC Letter No. 25-44 (Dec. 11, 2025), available at https://www.cftc.gov/csl/25-44/download; CFTC Letter No. 25-45 (Dec. 11, 2025), available at https://www.cftc.gov/csl/25-45/download; CFTC Letter No. 25-47 (Dec. 11, 2025), available at https://www.cftc.gov/csl/25-47/download; CFTC Letter No. 25-48 (Dec. 11, 2025), available at https://www.cftc.gov/csl/25-48/download; CFTC Letter No. 26-01 (Jan. 8, 2026), available at https://www.cftc.gov/csl/26-01/download; CFTC Letter No. 26-12 (May 1, 2026), available at https://www.cftc.gov/csl/26-12/download; and CFTC Letter No. 26-13 (May 4, 2026), available at https://www.cftc.gov/csl/26-13/download.

3 reported to a swap data repository (“SDR”).7 The CEA also authorizes the Commission to make swap transaction and pricing data available to the public in order to enhance price discovery. 8 This includes the authority to require registered entities to publicly disseminate swap transaction data. 9

Typically, under the Commission’s real-time swap reporting rules, SDRs perform this dissemination function. 10 Parts 43, 45, and 49 of the Commission’s regulations implement sections 2(a)(13)(G) and (D). 11 These regulations require that certain entities report swap data and swap transaction and pricing data to SDRs, and require that SDRs, in turn, provide swap data to the Commission and disseminate swap transaction and pricing data to the public. 12 This SDR reporting regime arose from Title VII of the 2010 Dodd-Frank Act, 13 which established a comprehensive new regulatory framework for swaps and security-based swaps. The Dodd-Frank Act was intended to reduce risk, increase transparency and promote market integrity within the financial system by, among other things, creating robust recordkeeping and real-time reporting regimes. As the Commission has noted, “public dissemination of standardized data should reduce the search costs to the public and market participants while increasing consolidation of real-time swap transaction and pricing data and promoting post-trade transparency and price discovery.”14 Separate from the SDR reporting regime for swaps, the Commission has long overseen the reporting regime for futures and options transactions and positions set out in Parts 15, 16, 17, 18, 19, and 21. 15 Whereas swap data reporting is sent to SDRs, which in turn process and provide swap data to the Commission and process and disseminate swap transaction and pricing data to the public, futures and options data is generally sent directly to the Commission, 16 while certain market data, including price, volume, and other transaction information, is separately published by DCMs. 17 7 The CEA states that “[e]ach swap (whether cleared or uncleared) shall be reported to a registered swap data repository.” 7 U.S.C. § 2(a)(13)(G). 8 7 U.S.C. § 2(a)(13)(B). 9 7 U.S.C. § 2(a)(13)(D). 10 See 17 C.F.R. § 43.4. 11 See 17 C.F.R. part 43; 17 C.F.R. part 45; 17 C.F.R. part 49. 12 See, e.g., 17 C.F.R. § 43.1. Whereas Part 43 generally concerns reporting and public dissemination of swap transaction and pricing data, Part 45 concerns reporting of more detailed swap data that is made available to the Commission, which includes counterparty-identifying information, life-cycle-event data, and valuation, margin, and collateral data. See, e.g., 17 C.F.R. § 45.4. 13 Public Law 111–203, 124 Stat. 1376 (2010) (herein, the “Dodd-Frank Act”). Pursuant to section 701 of the Dodd￾Frank Act, Title VII may be cited as the ‘‘Wall Street Transparency and Accountability Act of 2010.’’ 14 Final Rule, Real-Time Public Reporting of Swap Transaction Data, 77 Fed. Reg. 1182, 1185 (Jan. 9, 2012). 15 See 17 C.F.R. parts 15-19, 21. 16 See, e.g., 17 C.F.R. § 16.02 (requiring daily “trade and supporting data reports” consisting of “transaction-level trade data and related order information for each futures or options contract”); 17 C.F.R. § 17.00(a) (requiring daily reporting of “each futures
position, separately for each reporting market and for each future, and each put and call options position separately for each reporting market . . .”). 17 See, e.g., 17 C.F.R. § 16.01(e) (requiring publication of daily volume, price, and other information by DCMs and SEFs); 17 C.F.R. § 38.500 (DCM Core Principle 9 requires DCMs to “provide a competitive, open, and efficient market and mechanism for executing transactions that protects the price discovery process of trading in the centralized market of the board of trade”).

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Whether data related to a particular contract is required to be reported under the SDR reporting regime depends on whether that particular contract is a “swap.”18 This no-action letter addresses reporting for certain fully collateralized binary payout contracts and similar variable payout contracts based on the occurrence or non-occurrence of the events that are the subjects of the contracts. Such contracts may meet the “swap” definition, but are listed for trade by DCMs (rather than swap execution facilities) and have similar characteristics as futures and options on futures, 19 including highly-standardized terms, exchange-trading protocols, fungibility, and offset. 20 Accordingly, this letter would allow for firms to report certain event contracts directly to the Commission in a form similar to that provided for futures and options. Although the term “event contract” is not defined in the CEA or the Commission’s regulations, event contracts are generally understood to be a type of derivative contract, typically with a binary payoff structure, based on the outcome of an underlying occurrence or event. Event contracts can be structured as swaps, futures, 21 and/or options, depending on the structure and terms of the contract, including the underlying event. 22 Many, although not all, event contracts that have traded or are currently trading on Commission-registered exchanges are structured as binary options, which are generally understood as a type of option for which the payout is either a fixed amount or zero. 23 The Commission has generally found that binary options on commodities 18 7 U.S.C. § 2(a)(13)(G) (“Each swap (whether cleared or uncleared) shall be reported to a registered swap data repository.”). 19 See 7 U.S.C. § 1a(47)(A)(ii) (defining “swap” to include “any agreement, contract, or transaction . . . that provides for any purchase, sale, payment, or delivery (other than a dividend on an equity security) 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 . . . .”); see 7 U.S.C. § 1a(36) (defining "option” to include “an agreement, contract, or transaction that is of the character of, or is commonly known to the trade as, an ‘option’, ‘privilege’, ‘indemnity’, ‘bid’, ‘offer’, ‘put’, ‘call’, ‘advance guaranty’, or ‘decline guaranty’”). 20 See, e.g., CFTC Letter No. 17-31 (June 30, 2017) (no-action position with respect to certain reporting requirements for contracts the requester determined to be “swaps” but which the requester represented as “having most of the characteristics of exchange traded futures or options thereon (fungibility, offset, exchange traded with standardized terms) with few of the indicia of traditional swaps (bilateral, traded over-the-counter and customized)”). 21 See, e.g., Concept Release on the Appropriate Regulatory Treatment of Event Contracts, 73 Fed. Reg. 25669, 25670 (May
7, 2008) (“Event contracts, depending on their underlying interests, can be designed to exhibit the attributes of either options or futures contracts.”). 22 For example, an event contract might be structured as an option that settles into a futures contract, and therefore fall outside the “swap” definition. See 7 U.S.C. § 1a(47)(B)(i) (“The term ‘swap’ does not include . . . any contract of sale of a commodity for future delivery (or option on such a contract) . . . .”). 23 For example, CFTC Letter No. 17-31 took a no-action position with respect to “binary options and spread contracts” and CFTC Letter No. 17-32 took a no-action position with respect to binary options, including certain binary options for which, “if the index value at expiry is exactly equal to the strike level, then both sides split the payment evenly.” See CFTC Letter No. 17-31, at 1; CFTC Letter No. 17-32, at 1 n.3; see also CFTC Letter No. 25-02 (taking a no￾action position with respect to “variable payout contracts”). These examples are not exhaustive.

5 meet the swap definition. 24 DCM-listed binary options are also “options” as defined in 7 U.S.C. § 1a(36) 25 and regulation 15.00(o). 26 Historically, before 2010, DCM-listed event contracts structured as binary options were reported to the Commission as options under the futures and options reporting regime. 27 After the Commission issued regulations implementing the Dodd-Frank Act and creating the SDR reporting regime, certain reporting markets 28 listing event contracts structured as binary options and similar products requested and received no-action positions providing that the Divisions would not recommend an enforcement action for failure to report fully collateralized event contracts under the SDR reporting regime on the condition that those reporting markets reported such contracts under a version of the futures and options reporting regime. 29 Specifically, each of the no-action letters condition the no-action position on, among other things, the requestors (1) publishing on their websites trade time and price information and (2) providing the Commission with regulation
16.02 transaction data reports. 30 The no-action letters also generally require that the covered event
contracts be fully collateralized and cleared through certain clearinghouses. 31
III. Discussion
The Divisions believe the no-action position taken in this letter addresses several concerns. First, certain DCM and DCO rulebook changes may require the beneficiary of an Event Contract Reporting No-Action Letter to submit an additional request to modify or supplement that no-action letter. For example, if a DCM wishes to clear transactions using a different DCO 32 or modifies rules that previously prohibited intermediation to permit intermediation, 33 the no-action positions previously granted by the Divisions may not apply to contracts traded pursuant to these new rules. This creates additional burden for both industry and the Divisions, as DCMs may need to request new no-action positions or modifications to previously issued no-action positions. 24 See In re Blockratize, Inc. d/b/a Polymarket.com, CFTC Dkt. No. 22-09, at 2 (Jan. 3, 2022), available at https://www.cftc.gov/media/6891/enfblockratizeorder010322/download (certain “event contracts, each of which is composed of a pair of binary options, constitute swaps”). 25 See, e.g., Commodity Futures Trading Comm'n v. Trade Exch. Network Ltd., 117 F. Supp. 3d 29, 36 (D.D.C. 2015) (holding binary option event contracts allowing “customers to make predictions on the occurrence of events by either buying or selling shares” were “options”); Commodity Futures Trading Comm’n v. Vision Fin. Partners, LLC, 190 F. Supp. 3d 1126, 1130 (S.D. Fla. 2016) (finding binary options are commodity options as defined in 7 U.S.C. § 1a(36)). 26 17 C.F.R. § 15.00(o) (“Option, options, option contract, or options contract, unless specifically provided otherwise, means any contract for the purchase or sale of a commodity option that is executed on or subject to the rules of a reporting market, including all agreements, contracts and transactions that are treated by a clearing organization as fungible with such contracts.”). 27 See Final Rule, Market and Large Trader Reporting, 71 Fed. Reg. 37809 (July 3, 2006) (establishing reporting levels for binary option event contracts listed on HedgeStreet). 28 A “reporting market” is a “designated contract market or a registered entity under section 1a(40) of the [CEA].” 17 C.F.R. § 15.00(q). 29 See supra note 6. 30 Regulation 16.02 requires reporting markets to provide “provide trade and supporting data reports to the Commission on a daily basis,” which include, among other things, “transaction-level trade data and related order information for each futures or options contract.” 17 C.F.R. § 16.02. 31 See supra note 6. 32 See, e.g., CFTC Letter No. 24-15 (Oct. 4, 2024), available at https://www.cftc.gov/csl/24-15/download. 33 See, e.g., CFTC Letter No. 25-02 (Jan. 31, 2025), available at https://www.cftc.gov/csl/25-02/download.

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Second, addressing swap reporting for event contracts on an ad hoc basis leaves open opportunities for inconsistent no-action positions to be granted to similarly situated firms. Third, absent a no-action position with respect to swap reporting, DCMs listing binary options may be subject to duplicative reporting requirements under regulation 16.02, which applies to options listed on a reporting market, 34 and Part 45, which applies generally to swap transactions.
IV. No-Action Position
To address these concerns, the Divisions are taking a no-action position with respect to swap reporting and recordkeeping for certain fully collateralized binary payout contracts and similar variable payout contracts based on the occurrence or non-occurrence of the events that are the subjects of the contracts. The Divisions will not recommend that the Commission initiate an enforcement action against a DCM, a DCO, or their participants for failure to comply with Commission regulations 38.8(b), 38.10, 38.951 (only to the extent that regulation 38.951 requires compliance with Part 45 of the Commission’s regulations), 39.20(b)(2), as well as the applicable provisions of Parts 43 and 45 of the Commission’s regulations, or the requirements of the relevant CEA provisions pursuant to which the Relevant Regulations were promulgated, with respect to “Covered Contracts,” subject to the following conditions:35

1. The no-action position provided in the foregoing letter (the “No-Action Position”)
   applies only to “Covered Contracts.” Covered Contracts have the following characteristics:
   a. based on the outcome of an underlying occurrence, extent of an occurrence, or contingency; b. listed for trade on a designated contract market; and
   c. trade as fully collateralized positions, as defined by Commission regulation
   39.2.
   36
   34 17 C.F.R. § 16.02 (“Reporting markets shall provide trade and supporting data reports to the Commission on a daily basis. Such reports shall include transaction-level trade data and related order information for each futures or options contract.”). 35 Some of these conditions regarding the no-action position may constitute a collection of information, as that term is defined in the Paperwork Reduction Act, 44 U.S.C. §§ 3501 et. seq. The Office of Management and Budget (“OMB”)—in accordance with 44 U.S.C. § 3507(d) and 5 C.F.R. §§ 1320.8 and 1320.10—has approved collection 3038-0049, entitled “Procedural requirements for requests for interpretative, no-action and exemptive letters,” for such purposes. This collection would encompass collections made as part of exemptive or no-action positions from the Commission or its staff. The public is not required to respond to a collection of information that does not have a valid OMB control number. 36 Commission regulations define “fully collateralized position” as “a contract cleared by a derivatives clearing organization that requires the derivatives clearing organization to hold, at all times, funds in the form of the required payment sufficient to cover the maximum possible loss that a party or counterparty could incur upon liquidation or expiration of the contract.” 17 C.F.R. § 39.2.

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2) Beneficiary Designated Contract Market (“Beneficiary DCM”) will clear all Covered
Contracts through a Beneficiary Derivatives Clearing Organization (“Beneficiary DCO”);
3) Beneficiary DCM will publish on its website the following information for all Covered
Contracts transactions promptly 37 after execution thereof: trade timestamp, contract, quantity, and price;
4) Beneficiary DCM will provide the Commission with all transactional information for
Covered Contracts as described in Commission regulation 16.02;
5) Beneficiary DCM and any Beneficiary DCO will comply with all reporting and
recordkeeping requirements of the CEA and CFTC regulations applicable to them in their respective capacities as a DCM and a DCO, other than 38.8(b), 38.10, 38.951 (only to the extent that regulation 38.951 requires compliance with Part 45 of the Commission’s regulations), and 39.20(b)(2),38 and Parts 43 and 45, 39 including, but not limited to, the applicable requirements of Parts 38 and 39 of the Commission’s regulations (the records required to be retained by this condition (5) are referred to below as the “Required Records”); and
6) Beneficiary DCM and any Beneficiary DCO keep the Required Records open to
inspection upon request by any representative of the Commission, the United States Department of Justice, or the Securities and Exchange Commission, or by any representative of a prudential regulator as authorized by the Commission. Copies of all such records shall be provided, at the expense of Beneficiary DCM and any Beneficiary DCO to any representative of the Commission upon request. Beneficiary DCM and any Beneficiary DCO shall provide copies of the Required Records either by electronic means, in hard copy, or both, as requested by the Commission, with the sole exception that copies of records originally created and exclusively maintained in paper form may be provided in hard copy only. The no-action position provided in this letter applies to entities enumerated in the Appendix to this letter. The Divisions anticipate that additional entities may wish to seek a similar no-action position in the future. Entities intending to list contracts that have the characteristics of Covered Contracts may request a no-action position identical to the no-action position set out in this letter. If the Divisions grant such request, the Divisions will publish an updated Appendix reflecting additional beneficiaries. As described above, to ensure uniformity, this letter applies to the beneficiaries of all previously issued no-action letters applicable to these contracts. This letter will expire upon the compliance date of any final action taken by the Commission with respect to this matter. 37 “Promptly” means “as soon as technologically practicable,” as defined in regulation 43.2. 17 C.F.R. § 43.2(a). 38 17 C.F.R. § 38.8(b), § 38.10, § 38.951, § 39.20(b)(2). 39 17 C.F.R. Part 43; 17 C.F.R. Part 45.

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This letter expresses a staff position only with respect to enforcement of the Relevant Regulations. This letter does not state any legal conclusion regarding the characteristics or legality of any Covered Contract or the conduct of any person covered by the no-action position. 40 This letter and the no-action position taken herein represent the views of the Divisions only, and do not necessarily represent the positions or views of the Commission or of any other Commission division or office. This letter and the no-action position taken herein are not binding on the Commission. 41 Except as explicitly provided in this letter, the no-action position taken herein does not excuse persons from compliance with any applicable requirements of the CEA or Commission regulations. Further, this letter, and the no-action position contained herein, are based upon the representations made to the Divisions. Any different, changed, or omitted material facts or circumstances may render this letter void. As with all no-action letters, the Divisions retain the authority to, in their discretion, further condition, modify, suspend, terminate or otherwise restrict the terms of the no-action position provided herein. If you have any questions concerning this letter, please contact Paul Chaffin, Division of Market Oversight, at (202) 418-5185 or pchaffin@cftc.gov; Alicia Silverman, Division of Market Oversight, at (202) 418-5219 or asilverman@cftc.gov; Owen Kopon, Division of Market Oversight, at (202) 418-5360 or okopon@cftc.gov. Sincerely, ____________________ Joshua Beale Acting Director Division of Market Oversight ____________________ Richard Haynes Acting Director Division of Clearing and Risk 40 For the avoidance of doubt, this letter is not intended to address whether any Covered Contract is consistent with any statutory or regulatory requirement, including with respect to the requirements of CEA section 5c(c)(5)(C) or Commission regulation 40.11. 17 C.F.R. § 40.11. 41 See 17 C.F.R. § 140.99(a)(2) (“A no-action letter binds only the issuing Division… and not the Commission or other Commission staff.”).

Appendix – Beneficiaries of No-Action Position (as of August 12, 2026)
Aristotle Exchange DCM, Inc.
Aristotle Exchange DCO, Inc.
Bitnomial Exchange, LLC
Bitnomial Clearinghouse, LLC
Chicago Mercantile Exchange Inc.
C.X. Clearinghouse, L.P., formerly Cantor Clearinghouse, L.P.
Electron Exchange DCM, LLC
Electron Exchange DCO, LLC
FMX Futures Exchange, L.P., formerly Cantor Futures Exchange, L.P.
ForecastEx LLC
Gemini Olympus, LLC
Gemini Titan, LLC
Juice Exchange, LLC
KalshiEX LLC
Kalshi Klear LLC
Ludlow Exchange, LLC
North American Derivatives Exchange, Inc. d/b/a Crypto.com Derivatives North America ProphetX LLC QC Clearing LLC d/b/a Polymarket Clearing QCX LLC d/b/a Polymarket US Railbird Exchange, Inc. Rothera Exchange and Clearing, LLC, formerly LedgerX LLC Water Street Labs, LLC