In a letter to the Futures Industry Association, the Commodity Futures Trading Commission’s Division of Clearing and Risk has extended the time for clearing member FCMs to comply with certain provisions of CFTC Rule 1.73. Among other requirements, the rule provides that clearing member FCMs must (i) establish risk-based limits for all customer and proprietary accounts and (ii) screen orders subject to automated execution on a designated contract market (DCM) for compliance with the FCM’s risk-based limits prior to execution. The effective date of the rule is October 1, 2012.


The Division’s letter extends the compliance deadline to June 1, 2013, for give-ups and bunched orders for both futures and swaps and confirms that FCM-set risk controls at some of the exchanges, such as the CME’s Globex and ICE’s WebICE platforms, will be acceptable for compliance with the automated screening of orders requirement in Rule 1.73. Where exchanges do not offer these types of FCM-set controls, the CFTC letter grants clearing member FCMs utilizing these exchanges relief from complying with those provisions, if necessary, until the earlier of the date on which the DCM implements such system, or June 1, 2013. The letter reiterates CFTC’s position that risk controls that are reasonably designed to ensure compliance are sufficient for non-automated open outcry and voice execution.

The CFTC letter is available here.