Under a CFTC proposal, Federal Reserve Banks would be allowed to hold the customer funds of systemically important derivatives clearing organizations ("SIDCOs"). The proposal exempts such banks from legal liability under CEA Section 4d, and from potential third-party claims under CEA Section 22. The CFTC's request for comments on the proposal was published in the Federal Register.
The CFTC specified that the proposal would permit SIDCOs to maintain customer accounts with Federal Reserve Banks pursuant to the standard of liability set forth in the Federal Reserve Bank Governing Documents. The CFTC noted, however, that the proposed exemption would require a Federal Reserve Bank to segregate customer funds deposited by a SIDCO from proprietary funds deposited by a SIDCO, though the exemption also would shield such banks from liability under the CEA's private right of action provision.
The CFTC emphasized that permitting SIDCO-segregated customer accounts to be held at Federal Reserve Banks and enabling SIDCOs to access related services at such banks would augment SIDCOs' liquidity arrangements and enhance the protection of customer funds. The CFTC also maintained that customer funds held at such banks would not be exposed to the risks that are normally associated with commercial banks.
Comments on the proposal must be submitted by July 5, 2016.
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