CFTC amends rules governing FCMs

Futures commission merchants (FCMs) in the US will be permitted to enter into repurchase agreements and collateral management programmes using customer-deposited securities, following a rule amendment by the Commodity Futures Trading Commission (CFTC).

The rule – rule 1.25 – sets forth the types of instruments in which FCMs and clearing houses can invest customer funds. It was last amended in December 2000 to expand the number of permitted investments and to add provisions intended to minimise the credit, liquidity and volatility risk associated with the additional investments.

James Newsome, chairman of the CFTC, said: “We will continue to review our requirements and to consider suggestions for further refinements.”

Meanwhile, the CFTC said it has also announced several initiatives to safeguard the market’s faith in self-regulation. It is calling for all self-regulated organisations (SRO) to re-examine its regulatory procedures. At the same time, it will itself review the system of designated SROs where FCMs are assigned an SRO for examination and appraisal of its practices.