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22 Oct 2020

Eurex Clearing

FCM Regulations: Eurex Clearing AG Supports CFTC Letter No. 20-28 Extending No-Action Relief for Separate Account Treatment by FCMs

Eurex Clearing Circular 087/20 FCM Regulations: Eurex Clearing AG Supports CFTC Letter No. 20-28 Extending No-Action Relief for Separate Account Treatment by FCMs

1.   Introduction

With this circular and in its capacity as a derivatives clearing organization (DCO), Eurex Clearing AG (Eurex Clearing) is clarifying that, consistent with CFTC Letter No. 20-28 issued by the U.S. Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk on 15 September 2020.

Eurex Clearing will continue to permit its FCM Clearing Members to treat separate accounts of the same beneficial owner as separate accounts of separate entities for purposes of Eurex Clearing’s margining rules and procedures, as permitted by CFTC Letter No. 19-17 dated 10 July 2019 and consistent with the time extension provided in CFTC Letter No. 20-28.

2.   Required action

As provided in Eurex Clearing Circular 109/19, FCM Clearing Members wishing to avail themselves of the relief set forth in CFTC Letter No. 19-17 must continue to have updated written internal controls and procedures to reflect the conditions in CFTC Letter No. 19-17.

3.   Details of the initiative

On 10 July 2019, the CFTC Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk issued CFTC Letter No. 19-17, which provided market participants with guidance and time-limited no-action relief until 30 June 2021, subject to specified conditions set forth in CFTC Letter No. 19-17, with respect to CFTC Regulation 39.13(g)(8)(iii) as it relates to the treatment by FCMs of separate accounts of the same beneficial owner.

In response, Eurex Clearing issued Eurex Clearing Circular 109/19, clarifying that, until the earlier of 30 June 2021 or such time as the CFTC amends CFTC Regulation 39.13(g)(8)(iii), Eurex Clearing permits FCM Clearing Members to treat separate accounts of the same beneficial owner as separate accounts of separate entities for the purposes of Eurex Clearing’s margining rules and procedures, provided, however, that each FCM Clearing Member availing itself of this relief must have written internal controls and procedures that require it to, and it in fact does, comply with the conditions for the relief set forth in CFTC Letter No. 19-17.

On 15 September 2020, CFTC Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk issued the CFTC Letter No. 20-28, containing, in part, an extension of the no-action relief with respect to the treatment of separate accounts by FCMs provided in CFTC Letter No. 19-17 until the earlier 31 December 2021 (or any extension thereof pursuant to CFTC Regulation 140.99) or such time as the CFTC amends Regulation 39.13(g)(8)(iii). With this circular, Eurex Clearing clarifies that it supports the extension of the timeframe set forth in CFTC Letter No. 20-28 and that it will permit its FCM Clearing Members to utilize this extension.

Terms used and not otherwise defined in this circular shall have the meaning ascribed to them in the FCM Regulations of Eurex Clearing AG.
 

Further information

Recipients:

All FCM Clearing Members and FCM Clients of Eurex Clearing AG

Target groups:

Front Office/Trading, Middle + Back Office, IT/System Administration, Auditing/Security Coordination

Contact:

client.services@eurexclearing.com

Related circular:

Eurex Clearing circular 109/19

Web:

www.eurex.com/ec-en/

Authorised by:

Jens Janka