Derivatives regulation: CFTC staff spares passive trading software

On September 17, 2026, the Market Participants Division of the Commodity Futures Trading Commission issued CFTC Staff Letter No. 26-25, a no-action position for providers of what the staff called passive software. The letter covers software that helps users trade with registered futures commission merchants, introducing brokers and designated contract markets. Under the position, the division said it will not recommend that the Commission bring an enforcement action against such a provider for failing to register as an introducing broker, subject to conditions set out in the letter. It is a narrow piece of staff relief, but it touches one of the most persistent questions in derivatives regulation: when does a technology provider become an intermediary?

The registration question

The introducing broker category exists because the Commodity Exchange Act treats soliciting or accepting orders for futures as a regulated activity. A firm that does so must generally register, meet capital and conduct requirements, and submit to oversight, even if it never holds customer money. The theory is that anyone standing between a customer and the market, shaping how orders get placed, owes that customer certain duties.

Software complicates that picture. A trading interface, a charting tool or an app that routes instructions to a broker can look a lot like an order-taker, even if it has no discretion, takes no positions and holds no funds. Read literally, the registration rules could reach a wide range of technology vendors whose role is closer to that of a keyboard than a broker. Developers have long faced uncertainty about whether building a front end for futures trading obligates them to register.

The staff letter addresses that uncertainty by drawing a line around passivity. The defining feature of the covered providers, as the title of the letter suggests, is that their software is passive. The release does not list every condition, but the structure of the relief is clear: software providers that facilitate trading with already-registered entities, and that meet the stated conditions, will not face a staff recommendation for enforcement over the introducing broker registration requirement.

What no-action relief does and does not do

It is worth being precise about the legal weight of a no-action letter. It is a statement by a division of the agency that its staff will not recommend enforcement if a party acts within the described facts and conditions. It does not bind the Commission itself, it does not change the statute or the rules, and it can be withdrawn or modified. Firms that rely on it need to fit within its conditions and keep fitting within them as their products evolve.

That fragility is a feature of the approach as much as a weakness. Staff letters let the agency respond to new business models quickly, without a full notice-and-comment rulemaking, and they let it test a line before deciding whether to write it into regulation. The trade-off is that firms building businesses on staff relief carry some regulatory risk that a formal rule would remove.

Why it matters for derivatives regulation

The practical effect is to lower the barrier for technology firms that want to connect users to registered futures brokers and exchanges. That could widen the range of tools available to traders and hedgers, from professional platforms to consumer apps, without forcing each developer through a registration process designed for firms that handle orders and customer relationships directly.

There is also a customer protection logic in the structure of the relief. By tying it to software that works with registered FCMs, IBs and DCMs, the staff keeps a regulated entity in the chain. The customer’s account, funds and order execution remain with firms that are subject to capital, segregation and conduct rules. The software provider sits outside that perimeter only so long as it stays passive.

That boundary is where the hard cases will arise. Features such as order recommendations, default settings that steer users toward particular trades, or compensation arrangements tied to trading volume can turn a neutral interface into something that looks more like solicitation. Providers will need to examine their products against the letter’s conditions with care, particularly as they add features over time.

The relief also leaves the registered firms on the other side of the connection with work to do. Futures commission merchants and introducing brokers that accept orders through third-party software remain responsible for their own obligations, including knowing their customers, supervising activity in customer accounts and handling complaints. A passive interface does not shift those duties onto the software vendor. In practice, brokers are likely to look harder at the terms of their integrations, asking how a provider is paid, what the software displays to users and whether any feature could be read as a recommendation. The letter, in other words, does not only define what a software provider may do; it also sharpens the questions its regulated partners will ask before they connect.

What to watch

The letter is one of several pieces of staff relief issued in 2026, and it reflects a recurring tension between registration categories written for human intermediaries and businesses that are increasingly built on code. The questions to follow are whether the Commission eventually codifies a passive-software exemption through rulemaking, how many providers rely on Letter 26-25 in practice, and whether the staff later clarifies the conditions in response to products that test the edge of passivity. For anyone building trading tools, the letter offers room to operate, but within limits that will be defined case by case as derivatives regulation adapts to software-driven access.