Washington, D.C. — The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) and Division of Clearing and Risk (DCR) today issued a joint staff letter containing an advisory and time limited, conditional no-action relief related to the treatment by futures commission merchants (FCMs) of separate accounts for a particular customer.

This advisory and no-action relief builds on CFTC Staff Letter 19-17 in addressing CFTC Regulation 1.56’s prohibition on limited recourse, as well as requirements set forth by Regulation 39.13(g)(8)(iii) concerning FCM margining practices with respect to customers with more than one cleared derivatives account.

Specifically, the DCR-DSIO joint staff letter: (i) extends the time to comply with the conditions of relief until March 31, 2021given the extraordinary difficulties created by COVID-19; (ii) provides further interpretations regarding the requirements of Regulation 1.56 for separate accounts; (iii) provides further conditional no-action relief for cases where compliance with Regulation 1.56 is ambiguous, with the stipulation that fulfillment of the conditions be completed by March 31, 2021; and (iv) extends the overall time-limit on the conditional no-action relief with respect to Regulation 39.13(g)(8)(iii) through December 31, 2021.

“This advisory and conditional relief acknowledges the hard work that registrants are undertaking in difficult circumstances attributable to COVID-19,” explained DCR Director Clark Hutchison and DSIO Director Joshua Sterling.  “We fully expect that firms will make continued progress to complete all the necessary steps under these revised timelines.”