Alert October 09, 2012

CFTC Issues Guidance to FCMs on Omnibus Accounts

The CFTC’s Division of Swap Dealer and Intermediary Oversight issued a letter to futures commission merchants (FCMs) clarifying the record keeping requirements for customer segregated and secured funds maintained in carrying broker omnibus accounts.  In summary, the letter sets forth a determination by the Division’s staff that the practice of using a single account to hold both segregated and secured assets, regardless of memo notation as to allocation of the assets, does not provide a clear delineation of the assets as required under CFTC Regulations 1.20 and 30.7 and, in the event of a bankruptcy, may put customer funds at risk.