CFTC Proposes to Codify Treatment of Separate Accounts by FCMs

Commentary by Nihal Patel

The CFTC voted to propose rule amendments to codify no-action relief regarding the treatment of separate accounts by futures commission merchants ("FCMs"). The proposal is based on no-action relief by the CFTC Division of Clearing and Risk and the Market Participants Division in Letter No. 19-17, which was subsequently extended in Letters 20-28, 21-29 and 22-11.

The proposal would add a new section to CFTC Regulation 39.13 ("Risk management") to permit FCMs to treat separate accounts of a customer as accounts of separate entities, subject to a number of conditions, largely those addressed in the no-action letters.

The CFTC also noted, however, the following changes to the conditions from the prior staff letters:

  • supplemental reporting requirements for clearing members that are required to cease separate account treatment;
  • a process for clearing members to resume separate account treatment; and
  • clarifications relating to the requirement that separate accounts be one-business day margin call (including recognition of operational or administrative issues).

The comment period will be open for 60 days following publication in the Federal Register.


The CFTC in the past made a bit of a mess out of handling this issue. (See prior comment.) Writing rules to codify this relief is a positive step. Of course, the proposal can and should receive ample comment from industry participants.

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