CFTC Staff Issues No-Action Relief Extension to FCMs Regarding Compliance with Receipt of Customer Funds (CFTC Letter 14-131) (with Lofchie Comment)

The CFTC Division of Swap Dealer and Intermediary Oversight issued an extension of previously issued time-limited, no-action relief to the Futures Industry Association, its member futures commission merchants ("FCMs"), and similarly situated FCMs regarding the simultaneous recording of book entry credits upon the receipt of customer funds via a wire transfer by an FCM.

The relief extends previously issued no-action relief in Letter 14-88 pertaining to CFTC Rules 1.20 ("Futures Customer Funds to be Segregated and Separately Accounted For"), 22.2 ("Futures Commission Merchants: Treatment of Cleared Swaps and Associated Cleared Swaps Customer Collateral"), and 30.7 ("Treatment of Foreign Futures or Foreign Options Secured Amount") as those conditions relate to the receipt and recording of customer funds. The relief is conditioned upon FCMs maintaining compliance with its obligations to hold sufficient funds pursuant to the requirements of Section 4d(a)(2) Funds and Part 30 ("Foreign Futures and Foreign Options Transactions") of CFTC rules.

The relief provided in the prior letter had expired on October 31, 2014. The relief extended in this letter is of indefinite duration, "pending the Commission's consideration of the issues during a rulemaking process."

Lofchie Comment: The CFTC has already issued 131 no-action letters this year with more (mostly time-extension) no-action letters urgently required before this year ends. The time period granted in this letter is indefinite reflecting an improvement in CFTC operations and procedure. Accordingly, when the CFTC has resources available to fully address the issue, it can do so, without having wasted staff time drafting a series of further extensions.

See: CFTC Letter 14-131; CFTC Press Release.
Related news: CFTC Issues No-Action Relief to FCMs (CFTC Letter 14-88) (June 26, 2014).