January 13, 2014

CFTC Staff Issues No-Action Relief from the Limitation on the Holding of Customer Funds Outside of the United States under Regulation 30.7(c)

Washington, DC — The U.S. Commodity Futures Trading Commission’s (Commission) Division of Swap Dealer and Intermediary Oversight (DSIO) issued a no-action letter that provides relief with respect to compliance with certain provisions of Regulation 30.7(c) that restricts a futures commission merchant (FCM) from holding customer funds deposited to margin, guarantee, or secure foreign futures and foreign options transactions in jurisdictions outside of the United States (U.S.) in excess of 120 percent of total margin requirements.

 Various factors affect an FCM’s assessment of its exposure to offshore locations and the FCM’s ability to withdraw funds in excess of 120 percent of the total margin obligation, including multiple time zones in which the FCM holds customer funds, currency conversions, and the ability of foreign depositories to process requests for the withdrawal of funds.

Accordingly, DSIO will not recommend an enforcement action against an FCM that holds an amount of 30.7 customer funds with non-U.S. depositories that exceeds 120 percent of the total margin requirements, provided that the FCM: (1) identifies each business day whether it holds more than 120 percent of required margin for 30.7 customers with non-U.S. depositories; (2) initiates a transfer of any such excess funds from non-U.S. depositories to U.S. depositories on the same business day; and (3) receives the funds in U.S. depositories within 2 business days of initiating the transfer of such funds from the foreign depositories.

Last Updated: January 13, 2014