Many-to-many refers to a trading platform in which there are multiple buyers trading with multiple sellers and specifically where the participants can make bids and offers or accept bids and offers made by others.
This is in contrast to one-to-many markets where a single counterparty trades with all comers. Many-to-many is the most common type of market, and all exchanges and markets that are regulated by the CFTC, even lightly regulated ones, are many-to-many markets.
While the Commodity Exchange Act does not define the terms many-to-many or one-to-many, it does define “trading facility” in such a way that a many-to-many platform is a trading facility and a one-to-many platform is not.
This is relevant because one-to-many marketsare exempt from CFTC r egulations (such as those described in Section 2(g)), or mostly exempt from CFTC regulations (such as those described in Section 2(h)(1), which are subject only to regulations prohibiting fraud and manipulation). Many-to-many markets, on the other hand, are generally subject to CFTC regulations.
But the Commodity Exchange Act, like most legislation, is messy and complex and there are some many-to-many markets that are exempt from CFTC regulation. For example, under Section 2(d)(2), the “electronic trading facility exclusion,” entities called eligible contract participants can trade commodities called excluded commodities on electronic many-to-many markets and be exempt from CFTC regulations.