Special Notice: FIA provides FCMs with template disclosures regarding separate accounts

6 September 2019

FIA is circulating this notice to inform FIA members that an important new set of template disclosures have been added to the FIA's online documentation library.

On July 10, the Commodity Futures Trading Commission published Staff Advisory No. 19-17 regarding the treatment of separate accounts held at futures commission merchants by the same beneficial owner.

The Advisory, which was jointly issued by the CFTC's Division of Clearing and Risk and its Division of Swap Dealer and Intermediary Oversight, (i) clarifies the provisions of Commission Regulation 1.56(b) in respect of separate accounts of the same beneficial owner and the customer agreements governing such accounts, and (ii) extends no-action relief from Commission Regulation 39.13(g)(8)(iii) to derivatives clearing organizations to permit their FCM clearing members to treat separate accounts of the same beneficial owner as accounts of separate entities in the ordinary course of business for margin purposes. The no-action relief is valid until June 30, 2021, to provide the CFTC time to consider implementing appropriate relief on a permanent basis.

The no-action relief contained in the Advisory sets forth a number of terms and conditions that apply to FCMs that wish to benefit from the relief. They include conditions that require FCMs to disclosure certain information to customers, including a disclosure that all separate accounts of the beneficial owner will be combined in the event of an FCM bankruptcy.

To assist FCMs in meeting the disclosure conditions of the no-action relief, FIA has prepared templates with standardized language and posted them to the documentation section of its website. These forms are available at this link: Template Disclosures for FCMs Regarding Separate Accounts. Firms are free to use them, supplement them or incorporate them into their existing suite of disclosures to help them comply with the conditions of the no-action relief as they deem necessary and appropriate.

For further information, contact Mike Sorrell.

  • FIA
  • Clearing
  • Customer Protection \ Segregation