Washington, D.C.—March 18, 2015—FIA released a statement today in support of a CFTC final rule affecting certain procedural requirements for how futures commission merchants and their customers meet margin requirements. The final rule, announced yesterday, ensures that the current deadline for depositing residual interest will not be changed without an opportunity for public comment.
The residual interest deadline is the time at which futures commission merchants must inject their own resources to address any potential shortfall in their customers’ accounts. Currently, FCMs have a full business day to meet their residual interest obligations after they determine which accounts are under-margined. That timing was set to change automatically to the time of the daily settlement cycle by the end of 2018 without further public rulemaking and comment.
“We are pleased the CFTC responded to the concerns raised by agricultural groups and other end-users,” said Walt Lukken, president and CEO of FIA. “If the residual interest deadline were to be shortened, the resulting costs would drain liquidity from the futures markets and make it significantly more expensive for customers to hedge risk.”
“FIA supports strong customer protections and we have been actively engaged in efforts to strengthen those safeguards and provide customers with greater transparency into the financial condition of their futures commission merchants and the management of their funds,” Lukken said.
Lukken praised the rulemaking for allowing for greater public input into residual interest deadlines. “Any significant change in how and when residual interest is calculated and collected deserves a full and transparent public rulemaking process,” he said. “This final rule ensures that the residual interest deadline will not change without opportunity for thorough review and analysis of potential costs and benefits to end-users and the marketplace as a whole.”
Read More:
FIA Comment Letter on Proposed Residual Interest Amendment, Dec. 17, 2014
FIA Comment Letter on Enhanced Customer Protections, Feb. 13, 2013
