Investment of Customer Funds (Regulation 1.25)
The Commodity Futures Trading Commission (Commission) amended its regulations regarding the investment of customer segregated funds subject to Commission Regulation 1.25 (Regulation 1.25) and funds held in an account subject to Commission Regulation 30.7 (Regulation 30.7, and funds subject thereto, 30.7 funds). Certain amendments reflect the implementation of new statutory provisions enacted under Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The amendments address: certain changes to the list of permitted investments (including the elimination of in-house transactions), a clarification of the liquidity requirement, the removal of rating requirements, and an expansion of concentration limits including asset-based, issuer-based, and counterparty concentration restrictions. They also address revisions to the acknowledgment letter requirement for investment in a money market mutual fund (MMMF), revisions to the list of exceptions to the next-day redemption requirement for MMMFs, the elimination of repurchase and reverse repurchase agreements with affiliates, the application of customer segregated funds investment limitations to 30.7 funds, the removal of ratings requirements for depositories of 30.7 funds, the elimination of the option to designate a depository for 30.7 funds, and certain technical changes.
6/18/2012 A futures commission merchant (FCM) or derivatives clearing organization (DCO) that was already in compliance with Regulation 1.25 as of the effective date may not invest funds during the period of time between the effective date and the compliance date (the Compliance Period) if such investments would cause the FCM or DCO to move out of compliance. An FCM or DCO that did not comply with Regulation 1.25 as of the effective date has until the compliance date to fully comply. However, during the Compliance Period such an FCM or DCO may only alter its investments in a manner that advances its efforts to come into compliance – it may not pursue investments that would move it further out of compliance.