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In response to CFTC Letter No. 20-28, the Joint Audit Committee (JAC) has issued Regulatory Alert #20-02 and Regulatory Alert #20-03. As reported in the September 18 edition of Corporate & Financial Weekly Digest, CFTC Letter No. 20-28 provided supplemental guidance and no-action relief with respect to CFTC Regulation 1.56 (prohibition of guarantees against loss) compliance and further no-action relief with respect to the treatment of separate accounts by futures commission merchants (FCMs), initially set out in CFTC Letter No. 19-17. Specifically, with regard to compliance with the requirements of CFTC Regulation 1.56(b), Letter No. 20-28 gives FCMs until March 31, 2021 to remove or otherwise negate any limited recourse or similar provisions that may be contained in customer agreements. With regard to compliance with CFTC Rule 39.13(g)(8)(iii), the staff extended the time-limited no-action position from June 30, 2021 to December 31, 2021.
Continue Reading Joint Audit Committee Revises Earlier Regulatory Alerts to Conform to CFTC Letter No. 20-28

On September 15, the staff of the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) and Division of Swap Dealer and Intermediary Oversight (DSIO) issued CFTC Letter No. 20-28, providing supplemental guidance and further no-action relief with respect to the treatment of separate accounts by futures commission merchants (FCMs). Initial guidance and relief was set out in CFTC Letter No. 19-17, which was issued in July 2019.
Continue Reading CFTC Staff Issue Supplemental Advisory and Time-Limited No-Action Relief on Treatment of Separate Accounts by FCMs

The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk have issued CFTC Staff Advisory 19-17 (the Advisory), providing 1) guidance with respect to CFTC Rule 1.56(b); and 2) time-limited no-action relief with respect to CFTC Rule 39.13(g)(8)(iii), as those rules relate to the treatment of separate accounts of the same customer (i.e., beneficial owner). The Advisory responds to several requests for guidance following the publication of Joint Audit Committee (JAC) Regulatory Alerts #19-02 and #19-03.
Continue Reading CFTC Staff Provide Guidance, No-Action Relief With Respect to the Treatment of Separate Accounts by FCMs

On May 14, the Joint Audit Committee (JAC), a representative committee of US futures exchanges and the National Futures Association (NFA), released two regulatory alerts of particular importance to futures commission merchants (FCMs) that clear for customers whose accounts are managed by third-party advisers. The regulatory alerts “reconfirm and reiterate” the JAC’s view of existing law regarding guarantees against loss and margin in the context of multiple accounts of a single beneficial owner at an FCM, which accounts are managed by different advisers and/or traded pursuant to different programs of the same adviser.
Continue Reading Joint Audit Committee Releases Two Regulatory Alerts

On August 14, the Joint Audit Committee (JAC) released Regulatory Alert #18-04. The Alert, which responds to industry requests, clarifies the procedures that a futures commission merchant (FCM) should follow prior to making an intra-day withdrawal from the residual interest amount that the FCM maintains in its segregated, secured 30.7 and cleared swap customer accounts (Accounts) in order to ensure compliance with applicable Commodity Futures Trading Commission regulations.
Continue Reading Joint Audit Committee Publishes Regulatory Alert Regarding Residual Interest Withdrawals