RegAlert2017-12-19
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SEC Division of Investment Management staff letter: Chicago Mercantile Exchange
The Division of Investment Management extends no-action assurances permanently under Section 17(f) of the Investment Company Act of 1940, allowing registered investment companies to place and maintain cash and securities with the Chicago Mercantile Exchange or its clearing members to meet margin requirements for interest rate, credit default, commodity index, and foreign currency swaps. This relief applies provided the custodial arrangement complies with Rule 17f-6, including requirements for written contracts, legal segregation with operational commingling of collateral, prompt record furnishing, and daily withdrawal of gains. The assurance covers assets held by CME or CME Clearing Members for cleared transactions, contingent on the continued adherence to these specific custody and segregation standards.
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Investment Company Act of 1940- Section 17(f); Rule 17f-6 Chicago Mercantile Exchange
December 19, 2017
RESPONSE OF THE OFFICE OF CHIEF COUNSEL DIVISION OF INVESTMENT MANAGEMENT
File No.: 132-3
In a letter to you dated December 29, 2015, the staff of the Division of Investment Management indicated that we would not recommend enforcement action to the Commission under Section 17(f) of the Investment Company Act of 1940 (“1940 Act”) against any registered investment company (a “Fund”) if the Fund or its custodian places and maintains cash and/or certain securities (“assets”) in the custody of the Chicago Mercantile Exchange (“CME”), a derivatives clearing organization registered with the Commodity Futures Trading Commission (“CFTC”) or a CME or Board of Trade of the City of Chicago (“CBOT”) clearing member (a “CME Clearing Member”) that is a futures commission merchant registered with the CFTC (“FCM”), for purposes of meeting CME’s or the CME Clearing Member’s margin requirements for certain interest rate swaps (“IRS”), credit default swaps (“CDS”), cash-settled commodity index swap contracts (“CIS”) and foreign currency swap contracts (“FXS”) that are cleared by CME (“Letters”). [1]
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