At Last . . . The CFTC Proposes To Codify Letter 19-17

The CFTC has proposed rules codifying the staff no-action relief of CFTC Letter 19-17 (thrice-renewed since, pending these rules). I've written about the "long and winding road" by which we got to this momentous juncture; that story is available here.

Letter 19-17 addresses the processing of margin withdrawals by the customers of futures commission merchants that are clearing members of registered derivatives clearing organizations under CFTC Rule 39.13(g)(8)(iii). Rule 39.13(g)(8)(iii) provides that a registered DCO must require its FCM clearing members to ensure that their customers do not withdraw funds from their accounts unless the net liquidating value plus the margin deposits remaining in the customer's account after the withdrawal would be sufficient to meet the initial margin requirement applicable to the account. The intent of the rule is to mitigate the risk that a clearing member fails to hold customer funds sufficient to cover the required initial