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 June 2, the National Futures Association (NFA) issued Notice I-20-23 to advise member futures commission merchants (FCMs), forex dealers members (FDMs) and introducing brokers (IBs) that the Joint Audit Committee had recently issued Regulatory Alert #20-01 to remind these registrants of the appropriate net capital treatment of guaranteed obligations and liabilities of subsidiaries or affiliates.
Continue Reading NFA Issues Notice to Members Regarding Obligations Guaranteed by FCMs, FDMs and IBs

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