CFTC Tightens Rules on Where Futures Traders Park Your Money
Published Date: 1/22/2025
Rule
Summary
The CFTC is updating rules for how futures commission merchants and clearing organizations can invest customer funds, making sure investments are safer and better tracked. They’re changing limits on where money can go and adding new risk checks for certain investments. These changes affect firms handling futures and swaps, with new reporting rules kicking in soon and no more need for electronic account access from depositories.
Analyzed Economic Effects
5 provisions identified: 1 benefits, 4 costs, 0 mixed.
New rules on permitted investments
If you operate a futures commission merchant (FCM) or a derivatives clearing organization (DCO), the CFTC is changing the rules on what types of investments you may make with customer funds. The rule text amends the regulations governing those permitted investments for funds held for the benefit of customers in futures, foreign futures, and cleared swaps transactions.
Revised asset and issuer concentration limits
The CFTC is revising asset-based and issuer-based concentration limits that apply to investments of customer funds. If you run an FCM or DCO, these concentration limit changes affect how much of customer funds you may place in particular assets or with particular issuers.
Market risk capital charges for new investments
The CFTC is specifying market risk capital charges that a futures commission merchant must take on new investments that are added to the list of permitted investments when computing the firm's adjusted net capital. If you run an FCM, this changes how you must count capital against certain investments.
Revised reporting on customer funds and depositories
The CFTC is revising rules that require each FCM to report to the Commission and its designated self-regulatory organization the name, location, and amount of customer funds held by each depository, including any investments of customer funds held by the depository. If you run an FCM, you will have to follow the updated reporting rules about where customer funds are held and how they are invested by depositories.
Depositories no longer must give read-only account access
The CFTC is eliminating the requirement that each depository holding customer funds must provide the Commission with read-only electronic access to such accounts for an FCM to treat the funds as customer segregated funds. If you are a depository or an FCM, the depository will no longer be required to give the Commission that read-only electronic account access for segregation purposes.
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