CFTC Staff Opens IB Registration Relief to Passive Software Providers

The Commodity Futures Trading Commission’s Market Participants Division on September 17, 2026, issued a no-action position under which division staff will not recommend enforcement action against providers of passive software, or their relevant personnel, for failing to register as introducing brokers or as associated persons of introducing brokers. The position is broadly available to such providers and applies solely to their provision and marketing of software that facilitates trading by the providers’ users with registered futures commission merchants, introducing brokers, and designated contract markets.

The relief is set out in CFTC Letter No. 26-25, signed by MPD Director DJ Hennes and indexed under regulation parts 4d, 4k, 3.10, and 3.12. According to the division, the position extends, on substantially the same terms, the relief first granted to Phantom Technologies, Inc. in Letter 26-09 on March 17, 2026.

Registration Background and the Phantom Precedent

Under Section 4d(g) of the Commodity Exchange Act, it is unlawful for any person to act as an introducing broker without registering with the Commission. The Act and Commission Regulation 1.3 define an introducing broker as any person that, for compensation or profit, is engaged in soliciting or accepting orders for the purchase or sale of, among other financial products, any commodity for future delivery. Section 4k(1) and Regulation 3.12(a) likewise bar any person from acting as an associated person of an introducing broker without registration; Regulation 1.3 defines that category as a natural person associated with an IB as a partner, officer, employee, or agent who is involved in the solicitation or acceptance of customers’ orders, other than in a clerical capacity, or in the supervision of persons so engaged. The letter notes that the Commission has long construed the terms “soliciting and accepting” orders to cover a wide range of activities beyond literal solicitation or acceptance, citing an August 3, 1983 Federal Register release.

The Division of Clearing and Intermediary Oversight, an MPD predecessor, addressed that scope in interpretive Letters 06-29, 08-07, and 08-12, concluding that certain technology service vendors were not introducing brokers and need not register. Those determinations rested on six vendor representations: each customer had a pre-existing relationship with a futures commission merchant or IB independent of the vendor; the vendor would not recommend any particular FCM or IB, even on request; the vendor’s platform would produce no express buy or sell signals; the vendor would not solicit or accept orders for any commodity futures or options transaction; the vendor’s fees would not relate to execution fees charged by the FCM or IB; and the vendor held no membership with trading privileges on any designated contract market or derivatives transaction execution facility. Letters 06-29 and 08-07 additionally required that the vendor receive no compensation from any customer’s FCM or IB, a representation not required in Letter 08-12. Each letter cautioned that if the Commission later determined that persons providing technology to facilitate the order entry process must register, the vendor might have to comply with the applicable requirements at that time.

On March 13, 2026, counsel for Phantom Technologies requested no-action relief for the developer of self-custodial crypto asset wallet software used on blockchains including Bitcoin, Ethereum, and Solana. Phantom proposed to act as a technology service vendor to a designated contract market or to registered FCMs or IBs so that users could trade Commission-regulated derivatives, including event contracts and perpetual contracts, through its front-end interface software. Because certain proposed activities fell outside the TSV letter requirements (the registrant and user, for example, need not have a pre-existing relationship), Phantom could not rely on those letters, and MPD granted the requested position in Letter 26-09. Letter 26-25 states that the division subsequently received inquiries from other similarly situated passive software providers and their counsel seeking a similar position, and notes that under Regulation 140.99(a)(2) only a no-action letter’s beneficiary may rely on it, so no provider other than Phantom could rely on Letter 26-09. A footnote adds that passive software providers are not limited to providers of crypto asset related software.

Covered Activities and Ten Conditions

Letter 26-25 defines the Covered Activities to which the position applies. A provider may develop and distribute front-end interface software through which users review market data and aggregate position information, view information about product offerings, and submit orders for Commission-regulated derivatives, including event contracts and perpetual contracts, directly to registrants; the provider’s involvement in order submission is limited to providing software on the user’s device, with no affirmative involvement in any particular orders. The provider may contract with one or more registrants that agree to share a specified portion of relevant revenues with it, and may charge users a transaction-based fee directly under its terms of use. It may market its services and registrant relationships, including promoting the availability of particular derivatives contracts, and may introduce and solicit users to engage with specific registrants, provided users face no contractual or operational restriction from accessing those registrants directly. The interface may be offered as a standalone product or embedded in existing wallet software, in which case it must clearly and conspicuously distinguish when a user is engaging in Commission-regulated activity. Relevant personnel may demonstrate the software at industry conferences and make promotional statements on social media, in each case subject to the provider’s pre-approval and supervision.

The Covered Activities are limited to circumstances in which a user transacts on a designated contract market either directly as a member or indirectly as a customer of an FCM or IB that is a member of the DCM, with the funds or other property securing the user’s positions held in custody with the DCM’s derivatives clearing organization or a member FCM. The letter describes this as a “custodial” model of trading consistent with existing market structure for exchange-traded derivatives. At no point may the provider hold, control, or take into custody user assets, generate express buy or sell signals, or exercise discretion over the routing or execution of user orders.

The position carries ten conditions. The provider, its principals as defined in Regulation 3.1, and any individual soliciting users must not be subject to statutory disqualification under sections 8a(2) through 8a(4) of the Act, absent a division waiver, and the provider must promptly notify the division if a disqualification arises. The provider must deliver, and each user must acknowledge, disclosures of its registrant relationships and potential conflicts of interest including fees, plus a risk disclosure statement addressing the risks covered by Regulation 1.55(b); the risk disclosure may be delivered within terms of service or onboarding documentation with retained acknowledgement records, and is not required where a registered registrant is already obligated to provide the user a Regulation 1.55-consistent statement. Users must be onboarded as direct DCM members or as customers of registered FCMs and IBs and must retain the ability to access the registrant independently of the provider. The provider must adopt and enforce policies and procedures reasonably designed to ensure compliance with Commission and National Futures Association rules on communications with the public and marketing as if it were a registered IB, and may not engage in advertising or promotions that would require NFA pre-approval under NFA Compliance Rule 2-29. The provider and each of its registrants must execute written undertakings accepting joint and several liability for violations of the Act or Commission regulations by the provider or its personnel in the Covered Activities and consenting to Commission jurisdiction, with each undertaking filed with the division. The provider must maintain records consistent with Regulation 1.31, notify the division if it becomes insolvent or enters a bankruptcy proceeding, and file a notice agreeing to the conditions and consenting to Commission jurisdiction; a footnote directs providers affiliated with a state or tribal government to include any waiver of sovereign immunity necessary to make that consent enforceable.

The no-action position remains in effect until the effective date of a Commission rulemaking or guidance addressing application of the introducing broker registration requirement to software developers. Required submissions go to the MPD Director at [email protected] referencing the letter, and questions may be directed to Deputy Director Frank Fisanich, Associate Director Jacob Chachkin, or Special Counsel Christopher Cummings. The letter states that it represents the views of the division only, is not binding on the Commission, and is based on the facts and circumstances presented, and that the division retains the authority to condition, modify, suspend, terminate, or otherwise restrict the position in its discretion.