October 31, 2018

DSIO Issues No-Action Relief Regarding Futures Commission Merchant’s Deposit of Customer-Owned Securities as Margin with UK Broker

Washington, DC — The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued a no-action letter to provide relief to a futures commission merchant (FCM) from certain requirements regarding the holding of customer-owned securities as margin for trading on foreign futures and options markets under CFTC regulations. This letter supersedes CFTC Letter No. 16-88 and was issued due to certain changes in the facts and circumstances represented in letter 16-88 resulting from changes to European laws. 

The current relief provides that DSIO would not recommend an enforcement action if an FCM deposited customer-owned securities with a foreign broker located in the United Kingdom (UK) to margin foreign futures or foreign options positions executed on a UK foreign board of trade, and the UK foreign broker posted such securities with a UK clearing organization that is authorized as a central counterparty (EU CCP) under the European Market Infrastructure Regulation (EMIR).  Also, this relief is conditioned upon the EU CCP holding the customer-owned securities in a gross omnibus segregated account pursuant to EMIR requirements.