August 28, 2014

CFTC Staff Issues Rule Interpretation Concerning Deposit of Customer Funds with United Kingdom Depositories

Washington, DC —The U.S. Commodity Futures Trading Commission’s (Commission) Division of Swap Dealer and Intermediary Oversight (Division) today issued an interpretation of Commission Regulation 30.7(c) under the Commodity Exchange Act. The interpretation permits futures commission merchants (FCMs) to deposit customer funds margining foreign futures positions with UK-licensed investment firms that hold such funds in accordance with either UK Financial Conduct Authority’s (FCA) client money rules or as bank deposits subject to UK Prudential Regulation Authority (PRA) regulations.

Commission Regulation 30.7 generally addresses how FCMs may hold funds deposited by customers for trading on foreign markets. Regulation 30.7(c) provides that an FCM must deposit customer funds under the laws and regulations of a foreign jurisdiction that provides the greatest degree of protection to such funds, and further provides that an FCM may not waive any of the protections afforded to customer funds under the laws of the foreign jurisdiction.

The Division is issuing this interpretation to address requests received from FCMs for confirmation that an FCM is not waiving protections provided to customer funds if it elects to deposit customer funds with UK investment firms that are licensed banks as bank deposits subject to PRA regulation in lieu of client money deposits subject to FCA regulation.

Last Updated: August 28, 2014