Release Number 7759-18

July 19, 2018

CFTC Reduces Risk for Customer Funds Held by Derivatives Clearing Organizations by Expanding Investment Options

Washington, DC — The Commodity Futures Trading Commission (CFTC) unanimously approved an order that allows registered derivatives clearing organizations (DCOs) to invest customer euro cash in French and German sovereign debt.  Allowing DCOs to invest customer euro cash in high-quality European sovereign debt poses less risk than the current practice of holding customer euro cash at commercial banks.

“The CFTC is committed to promoting vibrant, competitive and financially sound global markets,” said Division of Clearing and Risk Director Brian Bussey. “With these expanded investment options, DCOs can manage their risks more effectively, while better protecting customer funds.”

The order exempts DCOs from certain restrictions on the investment of futures and swap customer funds, allowing funds held in euro cash to be invested in French and German sovereign debt. The CFTC granted this exemption on the basis that French and German debt have credit, liquidity, and volatility characteristics that are comparable to currently permitted investments in U.S. Government Securities, and adequately preserve principal and maintain the liquidity of customer funds.