Investment of Customer Funds and Funds Held in an Account for Foreign Futures (Final Rule)

76 FR XXXX

The CFTC has adopted a final rule regarding the investment of customer funds by FCMs and DCOs that i) eliminates in-house transactions and repurchase agreements with affiliates (repos with third-parties are still allowed, subject to a 25% counterparty concentration limit); ii) eliminates foreign sovereign debt as a permitted investment; iii) limits investments in money market mutual funds based on a number of factors, and iv) and harmonizes Rule 30.7 with the investment limitations of Rule 1.25 and the concentration limits on various investments to promote portfolio diversification.

The rule clarifies the scope of the ban and distinguishes in-house transactions from in-house sales of permitted investments and in-house exchanges of collateral to convert customer funds into collateral that will be accepted by a DCO or foreign board of trade as margin.

Cross References: Dodd-Frank Section 939A; CEA Section 4d; CFTC Rules 1.25 30.7.

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