The Commodity Futures Trading Commission has proposed to amend CFTC Regulations 1.20, 1.26 and 30.7 to require the inclusion of specified representations in acknowledgment letters obtained by futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) from depositories with which the FCM or DCO holds customer segregated funds and/or secured amount funds. The additional representations include acknowledgments by the depository that customer funds are not subject to any right of setoff or lien for liabilities of the FCM or DCO, that the depository must treat such funds in accordance with the Commodity Exchange Act (CEA) and CFTC regulations, and that the depository must immediately release such funds upon proper notice and instruction by the FCM, DCO or CFTC. The CFTC proposals would leave intact that portion of Regulation 1.20 that makes it unnecessary for an FCM to obtain an acknowledgment letter from a DCO whose rules provide for the segregation of customer funds in accordance with the CEA and CFTC regulations. The CFTC proposal would further require FCMs and DCOs to obtain updated acknowledgment letters within 180 days after the publication of final regulations in the Federal Register.
The comment period for the CFTC proposal expires on March 23.