CFTC Customer Clearing Documentation rules

New CFTC Regulations 1.72 and 23.608 prevent a futures commission merchant (“FCM”) and swap dealer (“SD”) or major swap participant (“MSP”), respectively, from entering into any arrangement that:

(a) discloses to an FCM, SD, or MSP the identity of a customer’s original executing counterparty;

(b) limits the number of counterparties with whom a customer may enter into a trade;

(c) restricts the size of the position a customer may take with any individual counterparty (apart from an overall credit limit for all of the customer’s positions);

(d) impairs a customer’s access to execution of a trade on terms that have a reasonable relationship to the best terms available; or

(e) prevents compliance with specified time frames for acceptance of trades into clearing.

New CFTC Regulation 1.74 requires FCMs to coordinate with each derivatives clearing organization (“DCO”) to allow the FCM or the DCO to accept or reject each trade submitted to the DCO as quickly as would be technologically practicable if automated systems were used.

New CFTC Regulation 23.506 imposes a similar requirement on a swap dealer or major swap participant when routing a swap to a DCO to be cleared.

1. redirect template:CCPboilerplate