On October 30, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) extended indefinitely the relief previously granted in CFTC No-Action Letters Nos. 14-02, 14-45 and 14-88, as reported in the June 27 edition of the Corporate Financial Weekly Digest.
CFTC Regulations 1.20, 22.2 and 30.7 prohibit the commingling of customer segregated funds, cleared swaps customer collateral and customer secured amount funds. The CFTC had stated that the prohibition on the commingling of customer funds would not prevent a customer from meeting margin calls for multiple customer account origins with a single payment provided that, among other conditions, the futures commission merchant (FCM) initially receives the margin payment into the customer segregated funds account required under Regulation 1.20.
The earlier letters provided time-limited relief with respect to compliance with this interpretation. An FCM relying on this relief is required to hold sufficient funds in its segregated funds, cleared swaps customer collateral and secured amount accounts to meet the net liquidating equities of all customers in each account origin at all times. This no-action position is further conditioned upon an FCM receiving customer margin deposits only in Section 4d(a)(2) Funds, Part 30 Secured Funds or Cleared Swaps Funds accounts. In granting the current relief, DSIO staff indicated that it anticipates recommending that the CFTC propose amendments to its rules to address the receipt of customer funds by an FCM. The current relief extends until the CFTC takes final action with respect to such amendments.
CFTC Letter No. 14-131 is available here.