FCM Regulations: Eurex Clearing AG supports CFTC Letter No. 22-11 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 the U.S. Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk issued CFTC Letter No. 22-11 dated 15 September 2022, 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. 22-11.

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.

To date, the CFTC Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk has extended the no-action relief with respect to the treatment of separate accounts by FCMs provided in CFTC Letter No. 19-17 in CFTC Letter No. 20-28 and No. 21-29.

On 15 September 2022, the CFTC Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk has extended this no-action relief further until the earlier of 30 September 2023 or the effective date of any final CFTC action relating to CFTC Regulation 39.13(g). With this circular, Eurex Clearing clarifies that it supports the extension of the timeframe set forth in CFTC Letter No. 22-11 and that it will permit its FCM Clearing Members to utilize this extension.

Unless the context requires otherwise, terms used and not otherwise defined in this circular shall have the meaning ascribed to them in the Clearing Conditions or FCM Clearing Conditions of Eurex Clearing AG, as applicable.
 

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