On July 19, 2018, the Commodity Futures Trading Commission (the “CFTC“) approved an order that allows registered derivatives clearing organizations (“DCOs“) to invest customer euro cash in French and German sovereign debt. Allowing DCOs to invest customer euro cash in high-quality European sovereign debt poses less risk than the current practice of holding customer euro cash at commercial banks. To read the full release, click here.
On December 5, the CFTC adopted amendments to Regulation 1.25 and Regulation 30.7, which govern the investment of customer and secured amount funds by derivatives clearing organizations (DCOs) and futures commission merchants (FCMs). The amendments address: (i) changes to the list of permitted investments, including the elimination of foreign sovereign debt and in-house transactions; (ii) a clarification of the liquidity requirement; (iii) the removal of rating requirements; and (iv) an expansion of concentration limits including asset-based, issuer-based, and counterparty concentration restrictions. The rule will be effective 60 days after the date of publication in the Federal Register. CFTC Q&A. CFTC Final Rules.
On October 18, pursuant to Section 725(c) of the Dodd-Frank Act, the CFTC adopted final rules establishing standards for compliance with certain core principals applicable to derivatives clearing organizations (DCOs). The CFTC also adopted rules requiring DCOs to designate a Chief Compliance Officer, and rules revising the DCO registration application. CFTC Fact Sheet.
