USCA4 Appeal: 25-1892
Doc: 16
Filed: 10/15/2025
Pg: 30 of 97
To obtain CFTC designation, exchanges must prove they can comply with 23 “ Core P rinciples” identified in the CEA and CFTC regulations. See
7 U.S.C. § 7(d); 17 C.F.R. pt. 38. DCMs must make daily disclosures
regarding market volume, 17 C.F.R. § 38.450; keep five years’ worth of trading records, id . §§ 38.950, 1.31(b)(1); offer “impartial access” to their platforms, id . § 38.151(b); make their records “open to inspection by” federal regulators, id . § 1.31(d)(1); and maintain capital reserves sufficient to cover “operating costs for a period of at least one year,” id . § 38.1101(a)(2). Among many other requirements, DCMs must also create and maintain a “ system capable of detecting and investigating potential trade practice violations,” id. § 38.156, monitor for “manipulation,” id. § 38.251, and “have the ability to comprehensively and accurately reconstruct all trading ” on their exchanges, id. § 38.256. Additionally, DCMs must work through a CFTC-regulated
clearinghouse, ensuring that financial obligations of all trade counterparties
are met by entities with sufficient liquidity. 7 U.S.C. § 7a-1.
The CEA prescribes a detailed system for the approval and listing of
contracts on DCMs. Until 2000, the CEA required DCMs to obtain CFTC
preapproval before listing any new contract and subjected all contracts to an “economic purpose” test. See 40 Fed. Reg. 25,849, 25,850 (June 19, 1975).
But this preapproval process proved onerous and inefficient, causing
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