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Volume X, Number 302


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October 26, 2020

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Joint Audit Committee Revises Earlier Regulatory Alerts to Conform to CFTC Letter No. 20-28

In response to CFTC Letter No. 20-28, the Joint Audit Committee (JAC) has issued Regulatory Alert #20-02 and Regulatory Alert #20-03. As reported here, CFTC Letter No. 20-28 provided supplemental guidance and no-action relief with respect to CFTC Regulation 1.56 (prohibition of guarantees against loss) compliance and further no-action relief with respect to the treatment of separate accounts by futures commission merchants (FCMs), initially set out in CFTC Letter No. 19-17. Specifically, with regard to compliance with the requirements of CFTC Regulation 1.56(b), Letter No. 20-28 gives FCMs until March 31, 2021 to remove or otherwise negate any limited recourse or similar provisions that may be contained in customer agreements. With regard to compliance with CFTC Rule 39.13(g)(8)(iii), the staff extended the time-limited no-action position from June 30, 2021 to December 31, 2021.

Regulatory Alert #20-02 and Regulatory Alert #20-03 revise earlier Regulatory Alerts that the JAC had issued following publication of CFTC Letter No. 19-17 for the sole purpose of updating the no-action dates set out in Letter No. 20-28. Specifically, (1) Regulatory Alert #20-02 amends Regulatory Alert #19-04 and Regulatory Alert #19-06 to include the relevant time frames set out in CFTC Letter 20-28; and (2) Regulatory Alert #20-03 amends JAC Regulatory Alert #19-03 to give FCMs until March 31, 2021 to take corrective action to identify and rectify any customer and noncustomer agreements which are not in compliance with CFTC Regulation 1.56(b). The JAC emphasizes that all other requirements of the earlier Regulatory Alerts remain in effect.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 269



About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.


Laura Krcmaric, Financial Services Attorney, Katten Law Firm

Laura Krcmaric represents clients in the financial services industry, focusing on regulatory and compliance work. Prior to joining Katten, Laura served as counsel for Credit Suisse, where she provided advice to the private banking and wealth management division. She also was an honors intern with the Securities and Exchange Commission.

While in law school, Laura served as a staff member and symposium editor for the North Carolina Law Review. She also was a member of the Community Development Law Clinic, representing nonprofit organizations.