Which assets does the SEC regulate, and which does the CFTC?
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It depends on the wrapper, not the underlying. Securities, such as stocks, bonds, ETF shares and options on stocks or stock indexes, are the SEC's; so are security-based swaps on a single stock. Commodity interests, such as futures (including gold and currency futures), options on futures and most swaps, are the CFTC's. A gold ETF share is a security, while a gold futures contract is a commodity interest. Bitcoin futures are CFTC-regulated; whether other tokens are securities depends on the token. A fund that trades commodity interests may need to register its manager as a commodity pool operator unless an exemption applies.
Everything here is for educational purposes only and is not legal, tax or investment advice, or an offer to buy or sell any security. Laws and thresholds change and depend on your facts, so talk to a qualified attorney before acting.
Key facts
- Securities (SEC): stocks, bonds, ETF shares, options on securities and security indexes.
- Security-based swaps on a single security or narrow index are regulated by the SEC.
- Commodity interests (CFTC): futures, options on futures, swaps and retail forex (17 CFR 1.3).
- Same underlying, different wrapper: a gold ETF share is a security; gold futures are a commodity interest.
- Bitcoin futures trade on CFTC-regulated exchanges; token status depends on the token.
- Trading commodity interests can require commodity pool operator registration unless exempt, e.g. Rule 4.13(a)(3).
Transcript
Operator: Gold can be an SEC asset or a CFTC asset. It depends on how you buy it.
Founder: It's the same gold.
Operator: Different wrapper. A gold ETF is a share, and shares are securities. That's the SEC.
Operator: Gold futures are commodity contracts. That's the CFTC.
Founder: Okay. What else goes where?
Operator: The SEC side: stocks, bonds, ETFs, and options on stocks or stock indexes.
Operator: The CFTC side: futures, including currency futures, options on futures, and most swaps.
Founder: And a swap on a single stock?
Operator: That's a security-based swap. Back to the SEC.
Founder: And crypto?
Operator: Bitcoin futures are the CFTC's. Whether other tokens are securities depends on the token, and the rules are still changing.
Founder: Why does it matter for my fund?
Operator: Trade CFTC assets, and you may have to register as a commodity pool operator, unless an exemption fits. So check the wrapper before you trade.
Founder: So it's the same gold...