CFTC Staff Extends Relief for FCM Separate Accounts

Commentary by Nihal Patel

The CFTC Division of Clearing and Risk and the Division of Swap Dealer and Intermediary Oversight (the "Divisions") issued an extension of no-action relief with respect to the treatment of separate accounts by futures commission merchants ("FCMs").

As previously covered, CFTC Letter 19-17 provided guidance for the rules relating to the treatment of separate accounts of the same customer, a beneficial owner. Letter 19-17 provided no-action relief through June 30, 2021, which relief was later extended by a CFTC staff statement to September 15, 2021. Subsequently, in Letter 20-28, the Divisions provided a further extension of the no-action relief until December 31, 2021.

In response to a request from the Futures Industry Association, the Divisions extended the relief with respect to Regulation 39.13(g)(8)(iii) ("Withdrawal of customer initial margin") until September 30, 2022. The Divisions noted that the extension was appropriate to provide the CFTC further time to determine whether action should be taken to codify the relief.


This relief comes more than two years after a curious CFTC staff statement that suggested no further clarification was needed and in which the staff said it "will not" extend the timeline for compliance at any point. As previously suggested, this is a matter where the CFTC should act through express, considered rules rather than ad hoc staff interpretations. It is good that the CFTC extended the current relief, although it does not seem especially likely that a rulemaking solution will be in place in nine months.

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