SEC proposes exempting EU debt from US futures trading rules

The Securities and Exchange Commission (SEC) is proposing to designate debt obligations issued by the European Union as “exempted securities” under the Securities Exchange Act of 1934, allowing futures contracts on those securities to be marketed and traded in the United States or to U.S. persons. The proposed rule, published in the Federal Register on September 2, 2026, would amend Rule 3a12-8 (17 CFR 240.3a12-8) and place futures on EU debt under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). Comments are due on or before November 2, 2026.

The proposal is designed to increase U.S. investors’ access to the market for these products, which the SEC says may improve hedging opportunities, lower transaction costs, contribute to greater market depth, reduce operational friction and increase competition. It would harmonize the regulatory treatment of EU debt with that of the eleven EU member states already listed in Rule 3a12-8 as “Designated Foreign Governments,” eliminating what the agency calls “asymmetric treatment and split jurisdictional oversight.”

Background and legal framework

Prior to the Commodity Futures Modernization Act of 2000 (CFMA), it was unlawful under the Commodity Exchange Act to trade a futures contract on any individual security unless it was an exempted security. The CFMA lifted that ban and granted the SEC and the CFTC joint jurisdiction over security futures, while commodity futures — including futures on exempted securities — remained under the CFTC’s exclusive jurisdiction.

Rule 3a12-8, adopted in 1984, designates the debt obligations of 21 foreign governments as exempted securities solely for the purpose of trading “Qualifying Foreign Futures Contracts.” Eleven of those countries are EU member states: France, Austria, Denmark, Finland, the Netherlands, Germany, Ireland, Italy, Spain, Belgium and Sweden. The EU itself is not currently covered, so futures on EU debt are subject to different regulatory treatment.

The proposed change

The amendment would add “a debt obligation of the EU” to the Rule’s definition of Designated Foreign Government Securities, rendering such obligations exempted securities for the offer, sale or confirmation of sale of Qualifying Foreign Futures Contracts. It would also add a definition of “debt obligation of the European Union” to identify the instruments within the Rule’s scope.

• The exemption applies only to futures trading; the underlying EU debt securities remain subject to Securities Act registration requirements unless another exemption applies.
• Futures on EU debt would become accessible to investors on CFTC-registered foreign boards of trade (FBOTs) providing direct access, a pathway currently limited to qualified institutional buyers (QIBs) and certain intermediaries.
• The SEC notes the European Central Bank assigns EU bonds to Haircut Category I alongside sovereigns, and that market participants increasingly view the EU as a sovereign-grade issuer.

Coordination and impact

In March 2026, the SEC and the CFTC signed a Memorandum of Understanding committing to coordinate in areas of common regulatory interest, and the proposal is framed as furthering those harmonization goals. The rulemaking is identified as Release No. 34-106225; File No. S7-2026-29; RIN 3235-AN82, with contacts Alexandra Oprea, John Guidroz and Carol McGee of the Division of Trading and Markets.

For U.S. investors and dealers, the change would create a new, broader avenue to hedge the risks of holding EU debt instruments, moving futures on EU bonds and bills out of the joint security-futures regime and into the CFTC’s commodity futures framework. The SEC said the trading of futures on EU debt is consistent with the public interest and the protection of investors.

Source: Federal Register, Vol. 91, No. 169, September 2, 2026, Proposed Rules, p. 56387 (official reference: Release No. 34-106225; File No. S7-2026-29; RIN 3235-AN82).