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The U.S. Commodity Futures Trading Commission (CFTC) recently announced the addition of 43 new unregistered foreign entities to its Registration Deficient (RED) List. This is part of the CFTC’s ongoing efforts to protect U.S. market participants from potential fraud and misconduct in derivatives and related markets.
What is the CFTC RED List?
The RED List is a public resource maintained by the CFTC that identifies foreign entities that appear to be acting in capacities requiring CFTC registration but are not registered with the Commission. It was launched in 2015 and now contains nearly 300 entities.
Why does the CFTC add entities to the RED List?
The primary purpose of the RED List is to serve as a warning tool for U.S. investors. Firms are typically added to the list when the CFTC, through investigative leads and public inquiries, determines that they are:
* Unregistered: They are not registered with the CFTC, despite appearing to operate in a capacity that requires registration under the Commodity Exchange Act.
* Soliciting U.S. Customers: They are soliciting or accepting funds from U.S. residents for products within the CFTC’s jurisdiction, such as:
* Futures
* Swaps
* Options
* Binary options
* Foreign currency (forex)
* Digital currencies
* Commodity pools
* Precious metals
Key takeaways about the RED List:
* Warning, not a formal finding of wrongdoing: Inclusion on the RED List does not mean that the CFTC or a court has formally concluded that a violation of any provision of the Commodity Exchange Act or the Commission’s regulations has occurred. However, it strongly advises caution.
* Lack of regulatory oversight: Unregistered entities lack the regulatory oversight that protects investors. This means customers dealing with these firms may have little to no protections if something goes wrong.
* Protection against fraud: The CFTC aims to help protect Americans from fraudulent schemes often associated with unregistered firms, which can include refusal to credit accounts, denial of fund reimbursement, identity theft, and manipulation of trading software.
* Complements other efforts: The RED List complements other CFTC initiatives, such as its “SmartCheck” campaign, which encourages investors to verify the registration status of firms before investing.
The CFTC regularly updates the RED List and circulates it to financial industry partners, including other regulators, consumer groups, and self-regulatory organizations, to enhance market transparency and facilitate risk mitigation for investors.

Video courtesy of CSOB

Video courtesy of CSOB