| The CFTC recently granted relief from the provisions within CFTC Regulations 1.20 and 30.7(c)(v) requiring separate acknowledgment letters for customer funds held at domestic clearing organizations. Refer to Joint Audit Committee Regulatory Update #9703 (MSWord document). As domestic clearing organizations are required to hold all customer funds in accordance with the Commodity Exchange Act and CFTC regulations, separate acknowledgment letters provide no additional customer protections. The relief was granted to those customer accounts at clearing organizations whose rules specifically provide that all funds held in an account designated as "customer" are held pursuant to the Commodity Exchange Act and CFTC Regulations. To comply with the provisions for relief, the CME adopted the following rule concerning the segregation of all customer funds held by the Exchange. 973. Customer Accounts with the Exchange All customer funds deposited with the Exchange shall be held in accordance with the Commodity Exchange Act and CFTC Regulation 1.20 in an account identified as Customer Segregated. Such customer funds shall be segregated by the Exchange and treated as belonging to the customers of the clearing member. Pursuant to this rule, a clearing member shall satisfy the segregation acknowledgment letter requirement of CME Rule 971.A.2., the Commodity Exchange Act, and CFTC Regulation 1.20 for customer deposits held at the Exchange.
Thus, clearing members no longer need to obtain and retain separate segregation acknowledgment letters for their customer accounts at the CME. If you have any questions, please call the Audit Department at (312) 930-3230 or e-mail us at audits@cme.com. | 