FIA warns proposed SEC safeguarding rule may harm FCMs, advisers and customers

10 May 2023

FIA has filed comments with the US Securities and Exchange Commission (SEC) on a proposal that would replace its existing custody rule. FIA’s comment letter highlights the proposed rule’s potential harms to Futures Commission Merchants (FCMs), registered investment advisers (RIAs) and their underlying customers.

FIA notes that the SEC for many years has recognized FCMs as qualified custodians with respect to clients’ funds and security futures and options based on the customer protections they are required to provide under the Commodity Exchange Act and US Commodity Futures Trading Commission regulations. The proposed rule would impose new requirements on FCMs acting as qualified custodians for RIAs that ignore the CFTC’s comprehensive customer protections rules, are inconsistent with the core functions of FCMs, and stand to undermine the ability of FCMs to efficiently serve RIAs and their underlying customers as they have for decades. FIA asks that the SEC exempt FCMs from the additional requirements in the proposed rule to avoid unnecessary duplication and conflicts with existing federal regulations and to continue to allow FCMs to provide safe and effective clearing and execution services for RIAs and their customers in securities and derivatives markets.

Read the full comment letter.

  • FIA
  • Compliance
  • Customer Protection \ Segregation
  • Recordkeeping and reporting
  • Advocacy