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CFTC Staff Provides Relief and Further Guidance Regarding FCM Separate Account Practices

Washington, D . C . — The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) and Division of Clearing and Risk (DCR) today issued a joint staff letter containing an advisory and time limited, conditional no-action relief related to the treatment by futures commission merchants (FCMs) of separate accounts for a particular customer .

This advisory and no-action relief builds on CFTC Staff Letter 19-17 in addressing CFTC Regulation 1 . 56’s prohibition on limited recourse, as well as requirements set forth by Regulation 39 . 13(g)(8)(iii) concerning FCM margining practices with respect to customers with more than one cleared derivatives account .

Specifically, the DCR-DSIO joint staff letter: (i) extends the time to comply with the conditions of relief until March 31, 2021given the extraordinary difficulties created by COVID-19; (ii) provides further interpretations regarding the requirements of Regulation 1 . 56 for separate accounts; (iii) provides further conditional no-action relief for cases where compliance with Regulation 1 . 56 is ambiguous, with the stipulation that fulfillment of the conditions be completed by March 31, 2021; and (iv) extends the overall time-limit on the conditional no-action relief with respect to Regulation 39 . 13(g)(8)(iii) through December 31, 2021 .

“This advisory and conditional relief acknowledges the hard work that registrants are undertaking in difficult circumstances attributable to COVID-19,” explained DCR Director Clark Hutchison and DSIO Director Joshua Sterling . “We fully expect that firms will make continued progress to complete all the necessary steps under these revised timelines . ”

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