Fidessa Fidessa

Residual Interest: CFTC Proposal Poses “Monumental” Challenge to FCMs

A rule proposed by the Commodity Futures Trading Commission (CFTC) designed to strengthen safeguards for customer deposits at futures commission merchants (FCMs) is threatening to overhaul the futures brokerage system.

The proposed “residual interest” provision introduced last fall, and discussed in a CFTC roundtable on February 5, would require substantial increases in margin buffers by FCMs.

The meeting led by Robert Wasserman, chief counsel of the CFTC’s Division of Clearing and Risk, included panelists Mike Dawley of Goldman Sachs and FIA chairman and Kim Taylor,  CME Clearing president who argued that the increased margin requirements under the proposal are substantial. Dawley said the rule, if passed in its current form, would be “one of the most monumental events”  in his 30 years in the industry.

John Lothian News has put together a special report on this critical issue. The deadline for comments on this proposed rule is February 15.

Comment letters can be submitted HERE.

Residual Interest Resources

  • CFTC Proposed Rule: Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations on MarketsReformWiki (link)
  • Residual Interest on MarketsWiki (link)
  • Futures Commission Merchant (link)
  • Customer Protection Regulation Comment Letters on MarketsReformWiki (link)
  • Full meeting video (link)

*All fields are required