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CFTC staff issues advisory for virtual currency products

The Division of Market Oversight and Division of Clearing and Risk of the Commodity Futures Trading Commission issued a joint staff advisory May 21, providing guidance to exchanges and clearinghouses registered with the CFTC for listing virtual currency derivative products.

The advisory provided guidance on certain enhancements when listing derivative contracts based on virtual currencies. It also clarified the priorities and expectations of the CFTC when reviewing new virtual currency derivatives.

Among key areas highlighted in the advisory was enhanced market surveillance, requiring designated contract markets or swap execution facilities to establish and maintain effective oversight program to ensure that listed contracts are not readily susceptible to manipulation. Also mentioned were close coordination between the CFTC and the listing exchange, large-trader reporting, outreach to member and market participants, and derivatives clearing organization risk management and governance.