Sep. 11, 2026
Re: Release No. 34-106225; File No. S7-2026-29; RIN 3235-AN82; Exemption of Debt Obligations Issued by the European Union Under the Securities Exchange Act of 1934 (2026-17939) Section III.C of the release, in Q9, asks whether commenters believe Rule 3a12-8 has become "obsolete, redundant or possibly a source of confusion" given the Commodity Futures Modernization Act and the Commission's 2009 Exemptive Order, and whether the Commission should consider repealing it. The release proceeds to propose expanding that same rule's scope to add the European Union before resolving the question it poses. A rule the agency is actively questioning the continued necessity of is not, on its own terms, a settled foundation to build further reliance on. The final rule should state the Commission's preliminary view on Rule 3a12-8's continued role before, or together with, expanding its coverage. A related gap concerns the liquidity showing offered in support of adding the EU. Table 2 of the release places EU bonds at a 3.1% share of notional trading volume across the EU and UK markets in the first half of 2025 - behind Italy (23%), Germany (10.2%), the UK (10%), France (8.9%), and Spain (3.7%), ahead only of an "Other" issuers category. Table 3 of the same release shows EU bonds carry the largest average trade size among all ten issuers compared, at €12,111,253. These two figures point in different directions: a small number of large institutional trades is a different liquidity signal than broad, continuous trading activity spread across many participants, and the release does not explain which metric the Commission weighs more heavily in applying the Rule's liquidity-based inclusion standard, or why. The historical benchmarks the release uses for comparison compound this gap. The most recent prior additions to the Rule, Belgium and Sweden in 1999, are supported by nominal 1990s figures - for example, Belgium's approximately $1.89 trillion in 1997 annual bond trading volume and Sweden's approximately $1.2 to $1.3 trillion in 1996 through 1998 volumes. Neither figure appears to be adjusted for inflation or for the substantial growth in global bond-market size and trading volume in the decades since. Comparing the EU's 2025 figures against an unadjusted 1990s benchmark tends to make the EU's current metrics look more comparable to the historical additions than they would appear on an inflation-adjusted, like-for-like basis. The Regulatory Flexibility Act certification presents a separate scope concern. It rests on the population "primarily interested in trading such futures contracts" being large institutional investors, and it evaluates small-entity impact solely against the broker-dealer definition in 17 CFR 240.0-10. The release's own Economic Analysis, however, states that as of May 31, 2026, the relevant CFTC-registered intermediary market included 71 futures commission merchants, 883 introducing brokers, 1,068 commodity pool operators, and 1,172 commodity trading advisors - categories the release discusses at length as participants that may intermediate customer access to Qualifying Foreign Futures Contracts under 17 CFR 48.4(b). The certification does not explain why small entities within these broader intermediary categories fall outside its scope when the release's own market description includes them. Finally, the release's benefits discussion does not apply to the primary proposal a judgment it makes elsewhere in the same release for a different option. In assessing the alternative of extending Rule 3a12-8 to all 27 EU member states, the release states that "the incremental benefit would likely consist primarily of regulatory harmonization... rather than a material expansion of trading volume," because the largest EU sovereign issuers are already designated. The release's own figures show the eleven currently-designated EU member states account for 83.24% of the EU's aggregate GDP, and separately that four of those eleven - Germany, Italy, France, and Spain - account for nearly 70% of actively-traded EU sovereign bonds. Given that overlap, the same reasoning could apply to the primary proposal to designate the EU itself, yet the release does not state whether it expects a similarly harmonization-driven, rather than access-expanding, benefit for the EU designation. These points concern the completeness of the record supporting the proposed designation's factual and analytical basis, not the underlying policy of harmonizing the regulatory treatment of EU sovereign debt futures, which this comment does not oppose. Submitted by: Steven Quinn Singleton