The CFTC has proposed removing a 13-year-old order book requirement for certain swap transactions, with public comments due within 30 days of its Federal Register publication.
The Commodity Futures Trading Commission said in an Aug. 20 regulatory notice that it is seeking feedback on an amendment to Regulation 37.3(a)(2), which sets the minimum trading functions that a swap execution facility must provide.
Under the proposal, a swap execution facility, or SEF, would no longer have to offer an order book for permitted transactions. The change would not prevent a platform from keeping the service when its customers use it, but each SEF could decide whether the costs and resources are justified.
Current rules require every registered SEF to maintain an order book for all swaps listed on the platform, including products that traders may execute through other methods. According to the commission, market participants have rarely chosen order books when trading permitted transactions, even though the facilities remain available.
“Today’s action continues the agency’s commitment to prescribing the minimum effective dose of regulation for market participants,” CFTC Chair Michael Selig said.
Selig added that removing what he called “excessive requirements” would keep the commission aligned with its principles-based approach to derivatives regulation.
CFTC proposal separates two classes of swap trades
Permitted transactions are swaps that are not subject to the trade execution requirement under Section 2(h)(8) of the Commodity Exchange Act. Federal rules allow SEFs to offer any execution method for the products, giving traders more choice over how they complete deals.
Required transactions fall under a separate set of rules. Unless an exemption applies, participants must execute the affected swaps through an order book or a request-for-quote system that meets CFTC requirements.
The Aug. 20 proposal applies only to the minimum order book function in Regulation 37.3(a)(2). According to the agency’s release, it would not remove the order book framework for required transactions or change which swaps must trade through prescribed execution methods.
Order books let market participants place multiple bids and offers, view prices submitted by other users, and trade against available quotes. When the CFTC finalized its SEF rules in 2013, the commission required platforms to provide the function for permitted transactions, even though users could select another execution method offered by the venue.
More than a decade of trading activity has now led the regulator to question whether every SEF still needs to support the function. In its proposal, the commission said the limited use of permitted-transaction order books indicates that the mandate may require platforms to maintain infrastructure that does not match customer trading practices.
SEFs could choose where to direct trading resources
Removing the mandate would allow SEFs to allocate staff, technology, and operating resources among the execution systems used on their platforms. According to the CFTC, venues could still maintain an order book when it suits a listed product or when clients request that form of trading.
At the same time, the commission said more flexibility could support the development of execution methods that better fit particular swaps. The agency did not identify a preferred replacement method or require SEFs to discontinue any existing service.
No immediate compliance change follows from the notice because the commission has not adopted a final rule. The proposal must first be published in the Federal Register, which will start a 30-day public comment period.
Interested parties may address the planned amendment, its costs, potential benefits, and possible effects on SEF trading. After reviewing the submissions, the CFTC may adopt the text as proposed, revise it, or leave the existing regulation in place.
The SEF measure follows another regulatory package released two days earlier. On Aug. 18, crypto.news reported that the commission’s CPO and CTA proposal would create registration relief for some SEC-registered investment advisers and double the small-pool exemption threshold from $400,000 to $800,000.
Unlike the SEF proposal’s 30-day window, comments on the Part 4 amendments will remain open for 45 days after Federal Register publication. The two proceedings concern different regulated groups, but both form part of Selig’s stated effort to remove requirements the agency considers duplicative or poorly matched to current market activity.
U.S. swap rules remain distinct from crypto spot oversight
For U.S. market participants, the SEF proposal concerns regulated swaps rather than ordinary purchases and sales of crypto assets on spot exchanges. The CFTC currently supervises commodity derivatives, including futures, options and swaps tied to digital assets, while its routine authority over spot commodity markets is more limited.
Congress is considering a separate expansion of the regulator’s digital asset role through the Digital Asset Market Clarity Act. Under the pending legislation, qualifying digital commodities would come under CFTC oversight, while the Securities and Exchange Commission would retain authority over assets and transactions governed by federal securities law.
Selig said on Aug. 20 that the commission has prepared crypto market proposals that could proceed under its existing authority if Congress does not finish the bill. His statement did not identify the completed proposals or provide publication dates.
Existing authority already lets the agency write rules for registered derivatives venues and intermediaries. According to the CFTC’s statutory framework, however, Congress would need to grant the commission the routine supervisory power over crypto spot exchanges contemplated by the CLARITY Act.
The House passed its version of the measure in July 2025, while the Senate Banking Committee advanced its text in May 2026. Senate Majority Leader John Thune later filed cloture on the motion to proceed, setting up a Sept. 15 procedural test that will require 60 votes.
Negotiators have yet to resolve disputes involving decentralized finance, ethics restrictions for public officials, and rewards offered on stablecoin balances. During an Aug. 19 White House event, President Donald Trump urged Congress to approve a “fair version” of the bill and said legislation was needed to preserve the administration’s digital asset policies.
CFTC advisers take up crypto, AI and prediction markets
Alongside its formal rulemaking work, the CFTC held the first IAC meeting on Aug. 20 from 1 p.m. to 4 p.m. EDT in Washington.
The Innovation Advisory Committee’s agenda included digital assets, artificial intelligence in financial markets, and prediction markets. Its crypto session covered customer protection, market integrity, overlapping federal authority and the commission’s ability to act under current law.
Committee participants included representatives from crypto companies, traditional financial institutions, academic organizations, and market infrastructure providers. Under the committee’s mandate, members may recommend policy measures, but they cannot adopt regulations or expand the commission’s legal authority.
Members of the public may submit written statements related to the meeting through Aug. 27. The CFTC said qualifying submissions must identify the Innovation Advisory Committee and will become part of the committee’s public record.
