CFTC Grants No-Action Relief for Certain Cleared Repo Transactions

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Explore:  CFTC No-Action Relief

[authors: Kevin M. Foley, Adam J. Spector]

The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission has adopted a no-action position authorizing registered futures commission merchants (FCMs) to enter into repurchase and reverse repurchase agreements (each, a Repo) that are cleared by a securities clearing agency. Although a securities clearing agency is not a permitted counterparty under CFTC Regulation 1.25(d)(2), DCR determined that FCMs engaging in repurchase transactions, whereby the ultimate counterparty is a securities clearing agency, poses no additional credit risk to customer funds, and in fact may reduce the credit risk in the transaction.

The CFTC’s no-action letter is available here.

 

Topics:  CFTC, No-Action Relief

Published In: Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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