A Quick Look: CFTC no-action letter 21-13

Commodity Futures Trading Commission (“CFTC”) staff in the Division of Clearing and Risk reaffirmed guidance from 2014 for a registered derivatives clearing organization, CX Clearinghouse, L.P. This no-action relief reaffirms the interpretive guidance in the CFTC staff’s letter 14-05, which derivatives clearing organizations have relied on when asserting that holding “funds in the form of the required payment sufficient to cover the maximum possible loss” from a contract’s liquidation or expiration meets regulatory requirements to have “sufficient financial resources to withstand a clearing member default” and for a “risk-based margin methodology”. CFTC staff further offered no-action relief to CX Clearinghouse, L.P. for not publishing a list of its clearing members because none of the derivatives clearing organization’s members may act as a futures commission merchant: each may only clear its own proprietary accounts. Under those conditions, the CFTC staff will not recommend enforcement action even though members’ trades won’t be publicly reported by CX Clearinghouse, L.P.