For Release: October 9, 2008
CFTC Issues Order to the CBOT that Permits the CME to Clear OTC Ethanol Contracts
Also Releases Interpretative Statement on Bankruptcy Treatment of Certain Customer Funds
Washington, DC—The Commodity Futures Trading Commission (CFTC or Commission) has issued an Order to the Chicago Board of Trade (CBOT) pursuant to Section 4d of the Commodity Exchange Act that permits the Chicago Mercantile Exchange (CME) and clearing member Futures Commission Merchants (FCMs) to commingle customer funds used to margin, secure, or guarantee specified Over-the-Counter (OTC) cleared-only contracts in Denatured Fuel Ethanol with other funds held in a segregated account. The order requires that the CME and the FCMs apply appropriate risk management procedures to these transactions and provide specified information to the Commission.
The Commission also issued an Interpretative Statement regarding the treatment of customer funds related to cleared-only positions held by a futures commission merchant, in the event of that FCM’s bankruptcy. The Interpretative Statement clarifies the appropriate treatment under the commodity broker provisions of the Bankruptcy Code and Part 190 of the Commission’s Regulations of claims arising from cleared-only contracts that, although not executed or traded on a registered exchange, are subsequently submitted for clearing at a registered derivatives clearing organization.
R. David Gary
Last Updated: October 9, 2008