This post is the final installment of our multi-part series on CFTC Regulation §1.44, as proposed by the U.S. Commodity Futures Trading Commission (the “CFTC”) on February 20, 2024 (the “Proposed Rule”).
This post provides an overview of proposed changes to other CFTC regulations that will be made if the Proposed Rule is adopted.
This post is the next installment of multi-part series on CFTC Regulation §1.44, as proposed by the U.S. Commodity Futures Trading Commission (the “CFTC”) on February 20, 2024 (the “Proposed Rule”).
This post will summarize information and disclosure requirements under proposed CFTC Regulation §1.44(h) that, if adopted, will apply in the separate account context.
This post is the next installment in a multi-part series on CFTC Regulation §1.44, as proposed by the U.S. Commodity Futures Trading Commission (the “CFTC”) on February 20, 2024 (the “Proposed Rule”).
The previous installment explained that a futures commission merchant (an “FCM”) can elect to treat separate accounts of a separate account customer as separate entities for purposes of the Margin Adequacy Requirement (the “Separate Account Election”) if three conditions are met.
This post will focus on one of those conditions—the requirement that the Separate Account Election can only be made during the “ordinary course of business.”
This post is the next installment in a multi-part series on CFTC Regulation §1.44, as proposed by the U.S. Commodity Futures Trading Commission (the “CFTC”) on February 20, 2024 (the “Proposed Rule”).
The previous installment discussed the Proposed Rule’s Margin Adequacy Requirement, the keystone of the Proposed Rule from a policy perspective.
In short, the Margin Adequacy Requirement is a regulatory mechanism that (i) is intended to prevent a customer of any futures commission merchant (an “FCM”) (both clearing and non-clearing FCMs) (ii) from withdrawing funds from that customer’s account that (iii) would render the post-withdrawal value of the account insufficient to meet the customer’s initial margin requirements with respect to all products held in that customer’s account.
This post considers the application of the Margin Adequacy Requirement to separate account customers in the ordinary course of business, which can be described as a “qualified exception” to the Margin Adequacy Requirement.
In sum, an FCM can treat separate accounts of a separate account customer as separate entities for purposes of the Margin Adequacy Requirement, as long as three key conditions are met.
The previous post in this series discussed how different market participants hold different views of the relationship between an investment manager and its clients, particularly in the separate account context. That post concluded our discussion of background considerations in respect of proposed CFTC Regulation §1.44 (the “Proposed Rule”) and the related Margin Adequacy Requirement in respect of separate accounts.
This part begins a consideration of the provisions and conditions in the Proposed Rule, and related comments made by the U.S. Commodity Futures Trading Commission (“CFTC”).
This post will focus on two key definitions in the Proposed Rule:
Other parts of this series will address other defined terms in the context of the specific provisions of the Proposed Rule in which those terms are used.