May 13, 2016

CFTC Staff Issues Residual Interest Deadline Report

Washington, DC — The U.S. Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight today issued a report on the “Residual Interest Deadline,” as required under CFTC regulations.

In March 2015, the CFTC eliminated the automatic termination of the phase-in compliance period for the Residual Interest Deadline (Deadline), which was scheduled to take place in December, 2018. Today, the Deadline remains at 6:00 p.m. ET on the date of settlement. The report concludes that CFTC staff has no basis to believe that changing the Deadline to the time of settlement, or to some other time of day, would be practicable for futures commission merchants (FCMs) or their customers at this time.

“This report, our recent roundtable and our earlier action to amend the residual interest rule all illustrate our commitment to protecting customer funds while at the same time not imposing undue burdens on commercial end-users," said CFTC Chairman Timothy Massad. “Today’s report reviews the comments the agency received following that action, which were largely supportive of maintaining the current deadline. I am pleased staff completed this report and I look forward to continuing to work with my fellow Commissioners to balance the objective of enhancing the safety of customer funds with operational concerns that are particularly important to smaller end-users.”

In 2013, the CFTC amended Regulation 1.22 to direct an FCM to maintain a sufficient amount of its own capital in segregated accounts, known as the FCM’s “residual interest,” to cover the undermargined amount in futures customers’ trading accounts as of the close of trading on the previous business day. The regulation also defines when an FCM must ensure the requisite amount of residual interest is held, known as the “Residual Interest Deadline.” This deadline in turn affects when customers must post margin with the FCM.

Members of the public wishing to comment on the report may do so following the instructions in the report or on the CFTC’s Comments Online process. All comments must be received by June 13, 2016.

Last Updated: May 13, 2016