CFTC Sets Comment Deadline on Proposal to Codify Treatment of Separate Accounts by FCMs

The CFTC set a comment deadline on proposed rule amendments which would codify no-action relief regarding the treatment of separate accounts by futures commission merchants ("FCMs"). The comment deadline is June 13, 2023. The deadline was published in the Federal Register.

As previously covered, 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 on a one-business-day margin call (including recognition of operational or administrative issues).

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