Commodity Futures Trading Commission acting chair Caroline Pham announced that the CFTC’s Market Participants Division published an interpretation to clarify the circumstances under which a futures commission merchant (FCM) may post customer-owned securities and securities purchased with customer funds with foreign brokers and foreign clearing organizations to margin customers’ foreign futures and foreign options positions in compliance with Part 30 of CFTC regulations.
“As part of the Administration’s commitment to promote American competitiveness and reduce unnecessary regulatory costs, I am pleased to announce that the CFTC today addressed longstanding issues that disadvantaged US customers that access foreign futures markets,” Pham said in a statement. “The commodity derivatives market is global, and American businesses should be able to hedge their risks overseas without being penalized. This interpretation to clarify our existing rules will unlock over $22 billion dollars of collateral that can then be redeployed to support US economic growth.”
The interpretation provides legal certainty regarding the requirements of CFTC Regulation 30.7, which the staff believes will reduce market participants’ costs in these foreign markets and address certain competitive disadvantages that FCMs experience with respect to customers trading on foreign markets. MPD issued the letter in response to a request from the Futures Industry Association.