CFTC Proposal for Enhanced FCM and DCO Protections

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On October 23, the CFTC proposed new regulations and amendments to existing regulations to enhance protections for customers and to strengthen safeguards for the holding of money, securities, and other property deposited by customers with futures commission merchants (FCMs) and derivatives clearing organizations (DCOs). The proposal would:

(i)     require FCMs to hold sufficient funds in secured accounts to meet their total obligations to U.S.- and foreign-domiciled customers trading on foreign contract markets;
(ii)    prohibit FCMs from holding certain positions in Part 30 secured accounts;
(iii)   require FCMs to hold sufficient proprietary funds in segregated accounts;
(iv)   require FCMs to maintain certain written policies and procedures;
(v)    require certain daily reporting;
(vi)   require FCMs and DCOs to provide the CFTC and designated SROs with read-only direct electronic access to bank and custodial accounts holding customer funds;
(vii)  require FCMs to adopt policies and procedures on supervision and risk management of customer funds;
(viii) require FCMs to provide potential customers with additional disclosures addressing firm specific risks; and
(ix)   enhance standards for SROs’ examination of member FCMs.

Comments may be submitted within 60 days after publication in the Federal Register. CFTC Release.

 

Topics:  CFTC, Derivatives, Derivatives Clearing Organizations, Future Commission Merchants, Futures, Securities

Published In: Administrative Agency Updates, Finance & Banking Updates, 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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