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12 November 2014
On October 23 2014 the US Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight issued an interpretation disclosing that a futures commission merchant (FCM) may credit a customer's futures, foreign futures and/or cleared swaps trading account for a margin payment upon the FCM's initiation of a withdrawal from the customer's bank account using the Automated Clearing House (ACH) transaction system.
A written agreement between the customer and the FCM would authorise the latter to institute an ACH transaction to withdraw funds from the customer's bank account to meet a margin call. CFTC regulations do not require an FCM to delay crediting the relevant customer's trading account until the check clears the customer's bank account.
The interpretation pertains to CFTC Regulations 1.22, 22.2 and 30.7 and is aligned with a previous staff interpretation regarding the FCM's procedure for recording checks deposited by customers for margin payments.
For further information on this topic please contact Donna M Parisi, Geoffrey B Goldman or Azam H Aziz at Shearman & Sterling LLP by telephone (+1 212 848 4000), fax (+1 212 848 7179) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Shearman & Sterling website can be accessed at www.shearman.com.
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