CFTC commissioner proposes new, tiered retail customer definitions

Commodities Futures Trading Commissioner Christy Goldsmith Romero is proposing a new retail investor definition for her agency, she said during a financial conference on Friday.

“I’m proposing a new definition of retail that divides between household retail, and then professional and high net worth,” Goldsmith Romero said. “Therefore we can tailor rules to one group and the other.”

As it stands now, the CFTC definition of a retail customer is an individual with total assets that do not exceed $10 million, or $5 million if the individual is entering into an agreement, contract or transaction to manage risk, as long as the customer does not qualify as an eligible contract participant under other regulations. The definition for retail is so broad, the commissioner noted, that it includes people who make less than $50,000 in the markets to hedge funds that make millions of dollars.

“What I propose is that we break that definition of retail in two, and then we can target rules and regulations to regular household people that may not be needed for a hedge fund or a millionaire. And then we can expand access,” Goldsmith Romero said. “There’s a great opportunity to expand access to financial markets.”

The Democratic commissioner made the comments at the Financial Markets Quality Conference hosted by Georgetown University. Goldsmith Romero appeared with Securities and Exchange Commissioner Mark Uyeda, a Republican appointee. 

The hourlong discussion also touched on digital assets. Washington lawmakers and regulators are paying increased attention to the crypto industry after this spring’s market crash.

The lack of regulation in crypto markets could lead “the most vulnerable people” to get hurt, Goldsmith Romero noted, because many investors in the United States are used to having consumer protections. Uyeda echoed that view, saying regulation shouldn’t “strangle the market” but help it prosper.

“You want to invest in a regulated market. I think we just start there. Let’s start at the top. Let’s get it regulated,” Goldsmith Romero said.

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