Federal Register: CFTC Adopts Final Order to Allow SIDCOs to Maintain Federal Reserve Bank Customer Accounts

The CFTC adopted a proposed Order to: (i) allow Federal Reserve Banks to hold the customer funds of systemically important derivatives clearing organizations ("SIDCOs"); and (ii) exempt such banks from legal liability under CEA Section 4d and from potential third-party claims under CEA Section 22. The final Order was published in the Federal Register.

Under the Order, SIDCOs would be permitted to maintain customer accounts with Federal Reserve Banks pursuant to the standard of liability set forth in the Federal Reserve Bank Governing Documents. The exemption would require a Federal Reserve Bank to segregate customer funds deposited by a SIDCO from proprietary funds deposited by a SIDCO, although the exemption also would shield such banks from liability under the CEA's private right of action provision.

The final Order is effective on August 8, 2016.