Conflicts and Affiliations

COMMODITY FUTURES TRADING COMMISSION 17 CFR Parts 1, 37, 38, and 39 RIN 3038–AF76 Conflicts and Affiliations AGENCY: Commodity Futures Trading Commission. ACTION: Notice of proposed rulemaking. SUMMARY: The Commodity Futures Trading Commission (‘‘CFTC’’ or ‘‘Commission’’) is proposing new rules and amendments to its existing regulations for futures commission merchants (‘‘FCMs’’), swap execution facilities (‘‘SEFs’’), designated contract markets (‘‘DCMs’’), and derivatives clearing organizations (‘‘DCOs’’) (the ‘‘Proposal’’). The Proposal addresses requirements relating to financial oversight of FCMs by self-regulatory organizations (‘‘SROs’’) and designated self-regulatory organizations (‘‘DSROs’’), as well as disclosure requirements by FCMs regarding affiliate relationships that an FCM has with a SEF, DCM, or DCO. For SEFs, DCMs, and DCOs, the Proposal would also establish requirements, including conflicts of interest rules, to address those registered entities’ relationships with certain affiliates, such as FCM affiliates and affiliated principal trading firms. The Proposal includes guidance regarding the implementation of safeguards to protect the impartiality of SEFs, DCMs, and DCOs, including where applicable in their role as SROs or performing SRO functions with respect to certain affiliates. The guidance addresses the sharing of resources including staffing, technology, and office space, and limitations on the sharing of non-public information. DATES: Comments must be in writing and received by October 5, 2026. ADDRESSES: You may submit comments, identified by ‘‘Conflicts and Affiliations’’ and RIN 3038–AF76, by any of the following methods:

• Regulations.gov: Go to https://
  www.regulations.gov and press the ‘‘Search’’ button, then proceed as follows:

1. Under Refine Documents Results—
   check the box to ‘‘Only show documents open for comment’’;
2. Under Agency—select ‘‘See More’’
   and check the box for ‘‘Commodity Futures Trading Commission,’’ then press the Apply button;
3. Identify this proposal in the list of
   CFTC documents open for comment, press the ‘‘Comment’’ button to open the submission form, and follow the instructions on the form. Alternatively, if you are viewing this proposal on www.federalregister.gov, click the ‘‘Submit A Public Comment’’ button at the top of the page to open the comment form. Follow the instructions on the form to submit your comment to Regulations.gov.

• Mail: Send to Christopher
  Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.
• Hand Delivery/Courier: Address
  to—CFTC Comment Submission, Attn:
  Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581. Please submit your comments using only one of these methods. To avoid possible delays with mail or in-person deliveries, submissions through Regulations.gov are encouraged. All comments must be submitted in English, or if not, accompanied by an English translation. Do not include in your comment text or attachments any personal identifying information or business information that you do not want published online. Comments (regardless of submission method) will be published without review for, and without removal of, any personal identifying information or information your business may consider confidential. If you wish to submit confidential information for the Commission’s consideration, please contact the CFTC personnel listed in this Notice under FOR FURTHER INFORMATION CONTACT before making any submission. Please also carefully review the Commission’s procedures in 17 CFR 145.9 for requesting confidential treatment under the Freedom of Information Act (‘‘FOIA’’) of information submitted to the Commission. The CFTC reserves the right, but shall have no obligation, to review, pre￾screen, filter, or redact all or any part of your comment submission. The CFTC also reserves the right, without further notification, to refuse to publish or to remove from public view all or any part of your submission to the extent it contains content inappropriate for publication in a comment file, such as— without limitation—obscene language, threats of violence, solicitations for commercial sales or illegal activity, or obvious spam. If a submission that is refused for or withdrawn from publication because of inappropriate content also contains comments on the merits of this proposal, such submission will be retained in the record for the matter and will be considered as required under the Administrative Procedure Act (‘‘APA’’) and other applicable laws, and may be accessible under the FOIA. Pursuant to the APA at 5 U.S.C. 553(b)(4), a plain language summary of the proposed rule is available at Regulations.gov. FOR FURTHER INFORMATION CONTACT:
  Stephen Andrews, Deputy General Counsel for Regulation, sdandrews@ cftc.gov, 202–418–5000, Office of the General Counsel, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581; Aaron Levine, alevine@cftc.gov, 646–746–9700, Office of the General Counsel, Commodity Futures Trading Commission, 290 Broadway, New York, NY 10007. SUPPLEMENTARY INFORMATION:
  Table of Contents
  I. Introduction
  A. Background
  B. Regulatory Background
  C. SEF and DCM Statutory and Regulatory
  Requirements
  D. FCM Statutory and Regulatory Requirements E. DCO Statutory and Regulatory Requirements F. Current Affiliated Relationships
  II. DCM Obligations—Proposed Amendments
  to Commission Regulations 1.52, 38.604, and 38.606 A. Proposed Amendments to Commission Regulation 1.52—SRO Surveillance of Financial Requirements for Affiliate FCMs B. Proposed Amendments to Commission Regulations 38.604 and 38.606—DCM Financial Surveillance of Members and Third-Party Regulatory Service Providers
  III. Exchange-Related Conflicts Mitigation
  A. Proposed New Commission Regulations
  38.852 and 37.1201—Conflicts of Interest
  Involving an Affiliate Market Participant B. Proposed New Commission Regulations 38.852(b) and (c)—Prohibition on Affiliate Principal Trading Firms and Conditional Affiliate Market Maker Exception
  C. Proposed New Commission Regulation
  38.853—Board Composition, Regulatory Oversight Committee, and Disciplinary Panels
  IV. DCO-Affiliate Clearing Member—
  Proposed Amendments to Commission Regulations 39.2, 39.21, and 39.25 A. Background B. Comments on the Affiliations RFC
  C. Identified Concerns
  D. Proposed Amendments E. Statutory Authority F. Alternatives Considered G. Request for Comment
  V. Public Disclosures by FCMs—Proposed
  Amendment to Commission Regulation 1.55 A. Background B. Comments on the Affiliations RFC