CFTC Issues Extension of No-Action Relief to FCMs (CFTC Letter 14-45)

The CFTC Division of Swap Dealer and Intermediary Oversight ("DSIO") issued an extension of time-limited no-action relief to futures commission merchants ("FCMs") which will expire on June 30, 2014.

On November 14, 2013, the CFTC adopted amendments to Rule 30.7 ("Treatment of Foreign Futures or Foreign Options Secured Amount") ("Customer Protection Rule"), which listed certain conditions under which an FCM can accept a single payment from a customer for deposit to the customer's CEA Section 4d(a)(2) segregation account and, as applicable, Part 30 secured account and cleared swaps account.

In extending the initial relief (CFTC Letter 14-02), the DSIO stated that it will not recommend enforcement action to the CFTC against an FCM that does not comply with certain conditions set forth in the Customer Protection Rule with respect to such single payments. The no-action position is conditioned upon the FCM's maintaining compliance with its obligation to hold sufficient funds in Section 4d(a)(2) segregation accounts, Part 30 secured accounts and cleared swaps accounts to meet the net liquidating equities of all of the FCM's customers in each respective account origin at all times.

See: CFTC Letter 14-45. Related news: Two CFTC No-Action Letters Regarding FCMs' Handling of Customer Funds (CFTC Letters 14-02 and 14-03) (with Lofchie Comment) (January 13, 2014).