Trading hemp derivatives is becoming a reality in the United States. The Wall Street Journal reports the Commodity Futures Trading Commission approved the first exchange for hemp derivatives when it allowed Seed SEF to register a swap execution facility, which is a trading platform. The hemp industry has long sought to distance the crop from marijuana, hemp’s biological cousin. Hemp contains less than .3 percent of THC, the compound that produces a high in marijuana. Hemp is used in an array of products from biofuels to clothing. Since 2014, the federal government has allowed the cultivation of industrial hemp for research and 30 states have passed legislation related to industrial hemp. But the Drug Enforcement Administration still includes industrial hemp in its schedule of controlled substances along with marijuana, presenting legal risks to those who grow and sell it unless they are licensed by their states.
From the National Association of Farm Broadcasting news service.
CFTC Grants Registration to Seed SEF LLC
The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has issued an Order of Registration to Seed SEF LLC (Seed), of Chicago, Illinois, granting it fully registered status with the CFTC as a Swap Execution Facility (SEF).
SEFs are trading facilities that operate under the CFTC’s regulatory oversight for trading and processing swaps. SEFs were authorized to be created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to provide greater pre-trade and post-trade transparency to the swaps market.
Seed is a Delaware limited liability company and a wholly-owned subsidiary of Seed CX LTD., a Delaware corporation.
Upon review of Seed’s application, the CFTC determined that Seed has demonstrated compliance with the Commodity Exchange Act (CEA) and the CFTC’s regulations applicable to SEFs. The terms and conditions applicable to the Order include, among others, that Seed shall comply with all provisions of the CEA and all requirements in the CFTC’s regulations, as may be amended or adopted from time to time, that are applicable to SEFs. Seed also shall comply with all representations and submissions made by it in support of its application for registration as a SEF.
The CFTC issued the Order pursuant to Section 5h of the CEA and CFTC Regulation 37.3(b). Registered SEFs must comply with the core principles in Section 5h of the CEA and any CFTC regulations applicable to them.
Including the Order issued today, there are currently 23 SEFs fully registered with the CFTC.