On August 28, 2014, the US Commodity Futures Trading Commission's ("CFTC") Division of Swap Dealer and Intermediary Oversight ("Division") issued an interpretation of CFTC Regulation 30.7(c) under the Commodity Exchange Act allowing futures commission merchants ("FCMs") to deposit customer funds used to margin foreign futures positions with UK-licensed investment firms that hold such funds under the UK Financial Conduct Authority's ("FCA") client money rules or as bank deposits subject to the UK Prudential Regulation Authority's ("PRA") rules.

Under CFTC Regulation 30.7(c), an FCM is required to deposit customer funds under the laws and regulations of a foreign jurisdiction that provides the greatest degree of protection to such funds. In addition, the regulation provides that an FCM may not waive any of the protections afforded to customer funds under the laws of the foreign jurisdiction. The Division's interpretation addresses requests received from FCMs confirming that an FCM does not waive protections provided to customer funds if it chooses to deposit customer funds with UK regulated banks.

The CFTC staff letter is available here: http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/14-110.pdf.

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