CFTC Tightens Self-Certification Rules for Derivatives Incentive Programs
Designated contract markets must immediately review and correct self-certification filings for market-maker, liquidity, trading, and incentive programs to avoid regulatory deficiencies identified by the CFTC.
On August 12, the CFTC Division of Market Oversight issued an advisory addressing a rising number of deficient self-certification filings under Regulation 40.6(a), particularly for event contract incentive programs. The advisory reminds designated contract markets of their obligations under Regulations 40.5 and 40.6 when submitting such programs. Concurrently, the CFTC exercised emergency authority to order KalshiEX to maintain operations consistent with Core Principles following a market emergency notification. The agency also reminded entities to display clear pricing information for event contracts. In-house counsel for derivatives exchanges and trading platforms should audit current and pending self-certification filings for compliance with the advisory’s procedural and substantive requirements, update internal review protocols, and monitor for potential enforcement scrutiny of deficient filings.