CFTC Issues Three No-Action Letters Regarding Written Acknowledgement Requirements (CFTC Letters 14-92, 14-93, and 14-94)

The CFTC Division of Clearing and Risk issued three separate no-action letters providing relief from the written acknowledgement requirements in CFTC Rules 1.20 ("Futures Customer Funds to be Segregated and Separately Accounted For") and 22.5 ("Futures Commission Merchants and Derivatives Clearing Organizations: Written Acknowledgement"). The letters provide time-limited no-action relief to Chicago Mercantile Exchange Inc., ICE Clear Europe Limited, and LCH.Clearnet Limited, respectively.

Each of the letters provide additional time for the CFTC and the depositories to develop procedures that will permit compliance with CFTC regulations requiring that the CFTC has access to certain information about customer assets held at the depositories. In particular, CME Clearing's request for temporary relief is premised upon a potential conflict between the terms of the Acknowledgment Letter and the requirements of Regulation 39.13(g)(14), which requires that "[i]f a [DCO] permits its clearing members to pledge assets for initial margin while retaining such assets in accounts in the names of such clearing members, the [DCO] shall ensure that such assets are unencumbered and that such a pledge has been validly created and validly perfected in the relevant jurisdiction." The ICE Clear Europe and LCH Clearnet requests will allow time for those DCOs to obtain and execute a modified version of the Acknowledgment Letter with the Bank of England.

As noted below, the CFTC also issued Letter 14-91 to the FCMs that have custody assets at the depositories.

See: CFTC Letters 14-92; 14-93; 14-94.
Related news: CFTC Issues No-Action for FCMs Regarding Acknowledgement Letters from Certain Depositories (CFTC Letter 14-91) (July 11, 2014).