CFTC Staff Letter 16-88: No-Action Position on Transfer of Customer Securities by US FCM to Foreign Broker

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5000
Facsimile: (202) 418-5521 www.cftc.gov
Division of Swap Dealer and
Intermediary Oversight
Eileen T. Flaherty
Director
I.
CFTC Letter No. 16-88
No-Action
December 9, 2016
Division of Swap Dealer and Intermediary Oversight Re: Commission Regulation 30.7 – Staff No-Action position regarding transfer of customer-owned securities by US FCM to foreign broker Dear ______:
This is in response to your letter dated October 4, 2016 and accompanying Appendix, submitted to the Division of Swap Dealer and Intermediary Oversight (“Division” or “DSIO”) of the Commodity Futures Trading Commission (“Commission”) on behalf of your clients, “X” and “Y”, as supplemented by e-mail messages to, and telephone conversations with, Division staff (collectively, the “Correspondence”). By your Correspondence, you request that DSIO confirm it will not recommend that the Commission take enforcement action against “X” or “Y” if, subject to certain terms and conditions noted below, (i) “X” deposits customer-owned securities with “Y” to margin such customers’ foreign futures or foreign options1 positions executed on a foreign board of trade located in the United Kingdom (“UK”) and cleared through a clearing organization that (a) is a central counterparty (“CCP”) that has received a recognition order as a recognized clearing house (“RCH”) and is subject to supervision by the Bank of England under
Part 18 of the Financial Services and Markets Act 2000, and (b) has been authorized as a CCP
pursuant to Article 17 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (“EMIR”) (each, an “EU CCP”); and (ii) “Y” deposits such securities in an individual client account (“ISA”) established with such EU CCP.