CFTC issues no-action position and interpretations addressing the holding of customer funds


The U.S. Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (Division) today issued no-action relief to futures commission merchants (FCMs) concerning the holding of customer funds deposited to margin foreign futures and foreign options transactions under Regulation 30.7.

Regulation 30.7 limits the amount of customer margin funds an FCM is permitted to maintain in accounts with non-U.S. depositories to 120 percent of the required margin on the customers’ foreign futures and foreign options positions. The no-action relief effectively permits an FCM to exclude customer funds deposited with a foreign bank or trust company that otherwise qualifies as a depository under Regulation 30.7 from the calculation of the 120 percent limit.

The Division also issued two interpretations of Regulation 30.7. The first interpretation provides that an FCM, under certain prescribed circumstances, may agree with a foreign depository to net offsetting transfers of customer funds between the FCM and the foreign depository instead of executing multiple transfers of funds between the FCM and the foreign depository. The second interpretation provides that an FCM, under the circumstances set forth in the interpretation, may substitute U.S. dollars for foreign currency in 30.7 customer accounts and consider such transaction as for the benefit of the FCM’s customers.

Swap Dealer and Intermediary Oversight (DSIO)
The Division of Swap Dealer and Intermediary Oversight oversees the registration and compliance of intermediaries and futures industry self-regulatory organizations (SROs), including U.S. derivatives exchanges and the National Futures Association (NFA). Under Dodd-Frank, DSIO also will be responsible for developing and monitoring compliance with regulations addressing registration, business conduct standards, capital adequacy, and margin requirements for swap dealers and major swap participants.

You can read the official announcement direct from the CFTC by clicking here.

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CFTC issues no-action position and interpretations addressing the holding of customer funds

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