2014-05465

Federal Register, Volume 79 Issue 49 (Thursday, March 13, 2014)[Federal Register Volume 79, Number 49 (Thursday, March 13, 2014)]

[Rules and Regulations]

[Pages 14174-14175]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2014-05465]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 30

RIN 3038-AD88

Enhancing Protections Afforded Customers and Customer Funds Held

by Futures Commission Merchants and Derivatives Clearing Organizations;

Correction

AGENCY: Commodity Futures Trading Commission.

ACTION: Correcting amendments.

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SUMMARY: The Commodity Futures Trading Commission (CFTC) is correcting

final rules published in the Federal Register of November 14, 2013 (78

FR 68506). Those rules, 17 CFR Parts 1, 3, 22, 30, and 140, took effect

on January 13, 2014. This correction amends Appendix E to Part 30

correcting a typographical error contained in that appendix.

DATES: Effective on March 13, 2014.

FOR FURTHER INFORMATION CONTACT: Thomas Smith, Deputy Director, 202-

418-5495, [email protected], or Mark Bretscher, Attorney-Advisor, 312-

596-0529, [email protected], Division of Swap Dealer and Intermediary

Oversight, Commodity Futures Trading Commission, Three Lafayette

Centre, 1155 21st Street NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: In the Federal Register of November 14, 2013

(78 FR 68506), the CFTC published final rules adopting new regulations

and amending existing regulations to require enhanced customer

protections, risk management programs, internal monitoring and

controls, capital and liquidity standards, customer disclosures, and

auditing and examination programs for futures commission merchants.

Those rules include Appendix E to Part 30--Acknowledgement Letter for

CFTC Regulation 30.7 Customer Secured Account (``acknowledgment

letter''). The third sentence of the second full paragraph of the body

of the Appendix E acknowledgement letter contains a typographical

error. Specifically, the phrase ``lines or credit'' should read ``lines

of credit''. The Commission is making a correcting amendment to

Appendix E to Part 30 to correct that error.

List of Subjects in 17 CFR Part 30

Commodity futures, Consumer protection, Currency, Reporting and

recordkeeping requirements.

Accordingly, 17 CFR part 30 is corrected by making the following

correcting amendment:

PART 30--FOREIGN FUTURES AND FOREIGN OPTIONS TRANSACTIONS

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1. The authority citation for part 30 continues to read as follows:

Authority: 7 U.S.C. 1a, 2, 6, 6c, and 12a, unless otherwise

noted.

0

2. Revise Appendix E to part 30 to read as follows:

Appendix E to Part 30--Acknowledgment Letter for CFTC Regulation 30.7

Customer Secured Account

[Date]

[Name and Address of Depository]

We refer to the Secured Amount Account(s) which [Name of Futures

Commission Merchant] (``we'' or ``our'') have opened or will open

with [Name of Depository] (``you'' or ``your'') entitled:

[Name of Futures Commission Merchant] [if applicable, add ``FCM

Customer Omnibus Account''] CFTC Regulation 30.7 Customer Secured

Account under Section 4(b) of the Commodity Exchange Act [and, if

applicable, ``, Abbreviated as [short title reflected in the

depository's electronic system]'']

Account Number(s): [ ] (collectively, the ``Account(s)'').

You acknowledge that we have opened or will open the above-

referenced Account(s) for the purpose of depositing, as applicable,

money, securities and other property (collectively ``Funds'') of

customers who trade foreign futures and/or foreign options (as such

terms are defined in U.S. Commodity Futures Trading Commission

(``CFTC'') Regulation 30.1, as amended); that the Funds held by you,

hereafter deposited in the Account(s) or accruing to the credit of

the Account(s), will be kept separate and apart and separately

accounted for on your books from our own funds and from any other

funds or accounts held by us, in accordance with the provisions of

the Commodity Exchange Act, as amended (the ``Act''), and Part 30 of

the CFTC's regulations, as amended; that the Funds may not be

commingled with our own funds in any proprietary account we maintain

with you; and that the Funds must otherwise be treated in accordance

with the provisions of Section 4(b) of the Act and CFTC Regulation

30.7.

Furthermore, you acknowledge and agree that such Funds may not

be used by you or by us to secure or guarantee any obligations that

we might owe to you, and they may not be used by us to secure or

obtain credit from you. You further acknowledge and agree that the

Funds in the Account(s) shall not be subject to any right of offset

or lien for or on account of any indebtedness, obligations or

liabilities we may now or in the future have owing to you. This

prohibition does not affect your right to recover funds advanced in

the form of cash transfers, lines of credit, repurchase agreements

or other similar liquidity arrangements you make in lieu of

liquidating non-cash assets held in the Account(s) or in lieu of

converting cash held in the Account(s) to cash in a different

currency.

In addition, you agree that the Account(s) may be examined at

any reasonable time by the director of the Division of Swap Dealer

and Intermediary Oversight of the CFTC or the director of the

Division of Clearing and Risk of the CFTC, or any successor

divisions, or such directors' designees, or an appropriate officer,

agent or employee of our designated self-regulatory organization

(``DSRO''), [Name of DSRO], and this letter constitutes the

authorization and direction of the undersigned on our behalf to

permit any such examination to take place without further notice or

consent from us.

You agree to reply promptly and directly to any request for

confirmation of account balances or provision of any other

information regarding or related to the Account(s) from the director

of the Division of Swap Dealer and Intermediary Oversight of the

CFTC or the director of the Division of Clearing and Risk of the

CFTC, or any successor divisions, or such directors' designees, or

an appropriate officer, agent, or employee of [Name of DSRO], acting

in its capacity as our DSRO, and this letter constitutes the

authorization and direction of the undersigned on our behalf to

release the requested information without further notice to or

consent from us.

You further acknowledge and agree that, pursuant to

authorization granted by us to you previously or herein, you have

provided, or will promptly provide following the opening of the

Account(s), the director of the Division of Swap Dealer and

Intermediary Oversight of the CFTC, or any successor division, or

such director's designees, with technological connectivity, which

may include provision of hardware, software, and related technology

and protocol support, to facilitate direct, read-only electronic

access to transaction and account balance information for the

Account(s). This letter constitutes the authorization and direction

of the undersigned on our behalf for you to establish this

connectivity and access if not previously established, without

further notice to or consent from us.

The parties agree that all actions on your part to respond to

the above information and access requests will be made in accordance

with, and subject to, such usual and customary authorization

verification and authentication policies and procedures as may be

employed by you to verify the authority of, and authenticate the

identity of, the individual making any such information or access

request, in order to provide for the secure transmission and

delivery of the

[[Page 14175]]

requested information or access to the appropriate recipient(s).

We will not hold you responsible for acting pursuant to any

information or access request from the director of the Division of

Swap Dealer and Intermediary Oversight of the CFTC or the director

of the Division of Clearing and Risk of the CFTC, or any successor

divisions, or such directors' designees, or an appropriate officer,

agent, or employee of [Name of DSRO], acting in its capacity as our

DSRO, upon which you have relied after having taken measures in

accordance with your applicable policies and procedures to assure

that such request was provided to you by an individual authorized to

make such a request.

In the event we become subject to either a voluntary or

involuntary petition for relief under the U.S. Bankruptcy Code, we

acknowledge that you will have no obligation to release the Funds

held in the Account(s), except upon instruction of the Trustee in

Bankruptcy or pursuant to the Order of the respective U.S.

Bankruptcy Court.

Notwithstanding anything in the foregoing to the contrary,

nothing contained herein shall be construed as limiting your right

to assert any right of offset or lien on assets that are not 30.7

customer funds maintained in the Account(s), or to impose such

charges against us or any proprietary account maintained by us with

you. Further, it is understood that amounts represented by checks,

drafts or other items shall not be considered to be part of the

Account(s) until finally collected. Accordingly, checks, drafts and

other items credited to the Account(s) and subsequently dishonored

or otherwise returned to you or reversed, for any reason, and any

claims relating thereto, including but not limited to claims of

alteration or forgery, may be charged back to the Account(s), and we

shall be responsible to you as a general endorser of all such items

whether or not actually so endorsed.

You may conclusively presume that any withdrawal from the

Account(s) and the balances maintained therein are in conformity

with the Act and CFTC regulations without any further inquiry,

provided that, in the ordinary course of your business as a

depository, you have no notice of or actual knowledge of a potential

violation by us of any provision of the Act or Part 30 of the CFTC

regulations that relates to the holding of customer funds; and you

shall not in any manner not expressly agreed to herein be

responsible to us for ensuring compliance by us with such provisions

of the Act and CFTC regulations; however, the aforementioned

presumption does not affect any obligation you may otherwise have

under the Act or CFTC regulations.

You may, and are hereby authorized to, obey the order, judgment,

decree or levy of any court of competent jurisdiction or any

governmental agency with jurisdiction, which order, judgment, decree

or levy relates in whole or in part to the Account(s). In any event,

you shall not be liable by reason of any action or omission to act

pursuant to any such order, judgment, decree or levy, to us or to

any other person, firm, association or corporation even if

thereafter any such order, decree, judgment or levy shall be

reversed, modified, set aside or vacated.

The terms of this letter agreement shall remain binding upon the

parties, their successors and assigns and, for the avoidance of

doubt, regardless of a change in the name of either party. This

letter agreement supersedes and replaces any prior agreement between

the parties in connection with the Account(s), including but not

limited to any prior acknowledgment letter agreement, to the extent

that such prior agreement is inconsistent with the terms hereof. In

the event of any conflict between this letter agreement and any

other agreement between the parties in connection with the

Account(s), this letter agreement shall govern with respect to

matters specific to Section 4(b) of the Act and the CFTC's

regulations thereunder, as amended.

This letter agreement shall be governed by and construed in

accordance with the laws of [Insert governing law] without regard to

the principles of choice of law.

Please acknowledge that you agree to abide by the requirements

and conditions set forth above by signing and returning to us the

enclosed copy of this letter agreement, and that you further agree

to provide a copy of this fully executed letter agreement directly

to the CFTC (via electronic means in a format and manner determined

by the CFTC) and to [Name of DSRO], acting in its capacity as our

DSRO. We hereby authorize and direct you to provide such copies

without further notice to or consent from us, no later than three

business days after opening the Account(s) or revising this letter

agreement, as applicable.

[Name of Futures Commission Merchant]

By:

Print Name:

Title:

ACKNOWLEDGED AND AGREED:

[Name of Depository]

By:

Print Name:

Title:

Contact Information: [Insert phone number and email address]

DATE:

Issued in Washington, DC, on March 7, 2014, by the Commission.

Christopher J. Kirkpatrick,

Deputy Secretary of the Commission.

[FR Doc. 2014-05465 Filed 3-12-14; 8:45 am]

BILLING CODE 6351-01-P

 

Last Updated: March 13, 2014