FIA requests CFTC codify no-action relief for treatment of separate accounts by FCMs

11 April 2022

FIA has written a letter to the US Commodity Futures Trading Commission requesting codification of no-action relief initially set forth in CFTC Letter No. 19-17, Advisory and Time-Limited No-Action Relief with Respect to the Treatment of Separate Accounts by Futures Commission Merchants, and subsequently extended in CFTC Letter Nos. 20-28 and 21-29. FIA’s letter asserts that a rulemaking, rather than time-limited no-action relief, is essential to provide both FCM clearing members and their customers legal certainty on the rules governing the margining of separate accounts of the same beneficial owner.

In support of FIA’s request, the letter notes that firms have implemented new processes and procedures to comply with the terms of the relief and therefore have a strong interest in being able to take advantage of the relief beyond its scheduled expiration in September 2022. FIA looks forward to the opportunity to comment on the proposed rulemaking on behalf of FCMs and encourages other impacted market participants to comment on this important issue during the open comment period.

In addition, the letter identifies challenges FCMs have experienced during their annual exams relating to the interpretation of CFTC Rule 1.56(b). Rule 1.56(b) prohibits FCMs from guaranteeing a customer against loss, among other related prohibitions. The letter requests a meeting with CFTC and Chicago Mercantile Exchange Financial and Regulatory Surveillance staff to discuss the appropriate interpretation of Rule 1.56.

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