CFTC-PR-9027-24 (12-20-24) (CFTC-PR-2412)

CFTC Approves Final Rule on Margin Adequacy, Treatment of Separate Accounts of a Customer by Futures Commission Merchants

Excerpt:  December 20, 2024 – WASHINGTON, D.C. — The Commodity Futures Trading Commission today announced a final rule to implement requirements for futures commission merchants related to margin adequacy and the treatment of separate accounts of a customer. The rule finalizes the Commission’s proposal, published in the Federal Register in March, to codify the no-action position in CFTC staff letter 19-17 regarding separate account treatment.

That staff letter, which was supplemented and extended by CFTC Staff Letters 20-28, 21-29, 22-11, 23-13, and 24-07, was jointly issued by the Division of Clearing and Risk and the Division of Swap Dealer and Intermediary Oversight (now Market Participants Division) on July 10, 2019. Letter 19-17 included a DCR staff no-action position stating DCR would not recommend an enforcement action if a derivatives clearing organization permits an FCM clearing member to treat the separate accounts of a customer as accounts of separate entities for purposes of CFTC Regulation 39.13(g)(8)(iii), so long as the clearing member’s internal controls and procedures require it to, and it in fact does comply with certain conditions.

In April 2023, the Commission published in the Federal Register its first proposal to codify the no-action position of Letter 19-17. In this first proposal, the Commission proposed to codify the no-action position of Letter 19-17 under its Part 39 DCO regulations, applicable to DCOs, and to their clearing FCMs through the operation of DCO rules. In light of comments received, the Commission withdrew the first proposal, and instead proposed requirements for separate account treatment in Part 1, directly applicable to FCMs.

Source:  https://www.cftc.gov/PressRoom/PressReleases/9027-24

Categories:  Agency Rules and Modifications

CFTC-PR-9027-24 (12-20-24)