Release Number 8676-23

CFTC Unanimously Approves Proposed Rule to Codify No-Action Position Regarding the Treatment of Separate Accounts of a Single Customer by Clearing Members

March 15, 2023

— The Commodity Futures Trading Commission today unanimously approved a proposed rule to codify the no-action position in CFTC Staff Letter No. 19-17 regarding the treatment of separate accounts of a single customer by futures commission merchants (FCMs) that are clearing members of derivatives clearing organizations (DCOs).

Letter 19-17, which was supplemented and extended by CFTC Staff Letter No. 20-28, and further extended by CFTC Staff Letters 21-29 and 22-11, was jointly issued by the Division of Clearing and Risk (DCR) and the Division of Swap Dealer and Intermediary Oversight (now Market Participants Division) on July 10, 2019.

The letter included a DCR staff no-action position that states a DCO may permit an FCM clearing member to treat the separate accounts of a customer as accounts of separate entities for purposes of CFTC Regulation 39.13(g)(8)(iii), where the clearing member’s internal controls and procedures require it to, and it in fact does comply with certain conditions. This regulation requires DCOs to ensure their clearing members do not allow customers to withdraw funds from their accounts if such withdrawal would create or exacerbate an initial margin shortfall, and the no-action conditions are designed to allow DCOs and their clearing members to continue to be able to effectively mitigate such risk.

The proposed rule would codify the no-action position regarding that regulation by adding new CFTC Regulation 39.13(j). The proposed rule would modify certain of the no-action conditions, including by adding (i) reporting requirements for clearing members that are required to cease separate account treatment; (ii) an explicit process for clearing members to resume separate account treatment; and (iii) provisions designed to further clarify the no-action condition that separate accounts be on a one-business day margin call.

The comment period will be open for 60 days after publication in the Federal Register. 

Comments may be submitted electronically through the CFTC Comments Portal.  All comments received will be posted on the CFTC’s website.