In the Matter of the New York Mercantile Exchange, Inc. Petition To Extend Interpretation Pursuant to Section 1a(12)(C) of the Commodity Exchange Act
On February 4, 2003, in response to a petition from the New York Mercantile Exchange, Inc. (``NYMEX'' or ``Exchange'') the Commodity Futures Trading Commission (``Commission''), issued an order \1\ pursuant to Section 1a(12)(C) of the Commodity Exchange Act (``Act''). The order provides that, subject to certain conditions, Exchange floor brokers and floor traders (collectively referred to hereafter as ``floor members'') who are registered with the Commission, when acting in a proprietary trading capacity, shall be deemed to be ``eligible contract participants'' as that term is defined in Section 1a(12) of the Act. The order (hereafter the ``original order'' or the ``ECP Order'') is effective for a two-year period and thus will expire on February 4, 2005.
Distribution of “Risk Disclosure Statement” by Futures Commission Merchants and Introducing Brokers
The Commodity Futures Trading Commission (``Commission'' or ``CFTC'') is amending Rule 1.55 to provide that non-institutional customers may indicate with a single signature, in addition to the acknowledgment of receipt of various disclosures and the making of certain elections, the consent referenced in Rules 155.3(b)(2) and 155.4(b)(2) and 155.4(b)(2) concerning customer permission for futures commission merchants (``FCMs'') and introducing brokers (``IBs'') to take the opposite side of an order. The Commission is also amending Rule 1.55(f) to specify that the acknowledgments required by Rules 155.3(b)(2) and 155.4(b)(2) are not required of institutional customers when they open an account.
Investment of Customer Funds and Record of Investments
The Commodity Futures Trading Commission (``Commission'') is proposing to amend its regulations regarding investment of customer funds and related recordkeeping requirements. The proposed amendments address standards for investing in instruments with embedded derivatives, requirements for adjustable rate securities (including auction rate securities), concentration limits on reverse repurchase agreements (``reverse repos''), transactions by futures commission merchants (``FCMs'') that are also registered as securities broker- dealers (``FCM/BDs''), rating standards and registration requirement for money market mutual funds (``MMMFs''), auditability standard for investment records, and certain technical changes. Among those technical changes is an amendment to the Commission's recordkeeping rules in connection with repurchase agreements (``repos'') and proposed transactions by FCM/BDs.
Section 4d(a)(2) of the Commodity Exchange Act (``CEA'') and related Commission regulations (hereinafter collectively referred to as ``segregation requirements'') require that, among other things, all funds deposited with a futures commission merchant (``FCM'') to purchase, margin, guarantee, or secure futures or commodity options transactions and all accruals thereon (``customer funds'' or ``customer margin'') be accounted for separately, be held for the benefit of customers and deposited under an account name that clearly identifies them as such, and not be commingled with the FCM's own funds,\1\ Further, the Division of Clearing and Intermediary Oversight (``Division'') has construed these provisions to prohibit any impediments or restrictions upon an FCM's ability to obtain immediate access to customer funds.