Co-authored by Christian B. Hennion

The Commodity Futures Trading Commission has published for comment proposed rules requiring a designated contract market (DCM) offering co-location or proximity hosting services to ensure that all market participants have equal access to such services. Under the proposed rules, access to co-location services must be “equitable, open and fair,” and may not be offered on a discriminatory basis to select market participants or select categories of market participants. To this end, the proposed rules would also require that fees charged for co-location services be imposed in a uniform, non-discriminatory manner. “Fees shall not be used as an artificial barrier to access by any market participants.” The proposed rules further provide that a DCM that offers co-location services must disclose monthly to the public on its website the longest, shortest and average latencies for each connectivity option provided by the designated contract market. This latter information would permit a market participant to assess whether incurring the benefit of co-location services is worth the cost.

Comments on the proposed rules must be submitted by July 12.

The CFTC proposal may be accessed here.