Order Providing Exemptive Relief To Facilitate Listing of Cash-Settled Futures on Individual Equity Securities
AI Analysis
The CFTC issued conditional exemptive relief allowing CME to list cash-settled futures on individual equity securities using the underlying stock’s closing price for final settlement, rather than the opening-price settlement ordinarily required for security futures. The order matters because it updates a core settlement design rule for single-stock futures, but only for CME and only if CME complies with the imposed listing standards and the order’s conditions.
Key dates
- 2025-07-25
- CME requested exemptive relief from CFTC regulation 41.25(c)
- 2026-07-10
- SEC granted CME exemptive relief, subject to heightened listing standards
- 2026-07-15
- CME submitted an updated request to the CFTC incorporating the SEC-conditioned listing standards
- 2026-07-16
- CFTC order became applicable
- 2026-07-21
- Federal Register publication date of the CFTC order
Suggested considerations
- Compliance teams may wish to review whether any proposed or existing single-stock futures products rely on opening-price settlement and whether the CME order changes product design assumptions.
- Firms may wish to confirm that the relevant underlying securities satisfy CME’s heightened liquidity and market-capitalization listing standards before marketing, clearing, or supporting these contracts.
- Market surveillance teams may wish to assess whether surveillance procedures need updating for closing-price settlement mechanics and end-of-day manipulation risks.
- Operational teams may wish to align settlement, market data, and surveillance processes with the product’s closing-price final settlement methodology.
- Legal and regulatory teams may wish to track the separate SEC and CFTC conditions, since CME’s ability to proceed depends on both regimes.
What changed
The order exempts CME from CFTC regulation 41.25(c), which generally requires the final settlement price of a cash-settled security futures product to fairly reflect the opening price of the underlying security or securities. The relief is granted under regulation 41.25(e), which permits exemptions on specified terms and conditions when consistent with the public interest and the protection of customers. CME may therefore use the underlying security’s closing price on the last day of trading for final settlement of the proposed cash-settled futures on individual equity securities, provided it meets the heightened listing standards described in the order. The CFTC’s rationale is that market conditions have changed since the opening-price rule was adopted in 2002: CME presented data suggest
Compliance impact
The practical impact is moderate to high for CME and firms directly supporting these products, because the order changes the settlement convention for a new security futures offering and ties the relief to specific listing conditions. The CFTC frames the relief as consistent with the public interest and customer protection, but it also remains conditional and limited, meaning non-compliance could
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original CFTC source before acting. Full disclaimer.
What the CFTC said
Order. The Commodity Futures Trading Commission ("Commission" or "CFTC") is issuing an order pursuant to the Commodity Exchange Act ("CEA") that provides exemptive relief from the Commission's opening price settlement requirement for security futures products in connection with Chicago Mercantile Exchange Inc.'s…
Extract from CFTC . Read the full notice at the source for the authoritative text.