Staff Interpretation Regarding FCM Deposits of Securities with Foreign Brokers and Foreign Clearing Organizations to Margin Customer Positions Entered into on, or Subject to the Rules of, a Foreign Board of Trade.

Summary: Staff Interpretation Regarding FCM Deposits of Securities with Foreign Brokers and Foreign Clearing Organizations to Margin Customer Positions Entered into on, or Subject to the Rules of, a Foreign Board of Trade.

CFTC Letter No. 25-38 Interpretative November 25, 2025

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U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581

www.cftc.gov

Market Participants

Division

Thomas J. Smith

Acting Director

RE: Staff Interpretation Regarding FCM Deposits of Securities with Foreign Brokers and

Foreign Clearing Organizations to Margin Customer Positions Entered into on, or

Subject to the Rules of, a Foreign Board of Trade

The Market Participants Division (“MPD” or “Division”) of the Commodity Futures Trading

Commission (“CFTC” or “Commission”) is issuing this letter in response to a request from the

Futures Industry Association (“FIA”) on behalf of its members that are futures commission

merchants (“FCMs”) and similarly situated FCMs.1 FIA requests that MPD issue an interpretative

letter pursuant to Commission Regulation 140.992 confirming that an FCM may post customer-

owned securities and securities purchased with customer funds (collectively, “Customer

Securities”) with foreign brokers and foreign clearing organizations (together, “foreign

intermediaries”) to margin customers’ foreign futures and foreign options positions3 under

circumstances where the foreign broker or foreign clearing organization is authorized or required

1 FIA is a global trade organization for futures, options, and centrally cleared derivatives markets. FIA’s core

constituency consists of firms that operate as clearing members in global derivatives markets, including firms

registered with the Commission as FCMs

foreign options positions3 under

circumstances where the foreign broker or foreign clearing organization is authorized or required

1 FIA is a global trade organization for futures, options, and centrally cleared derivatives markets. FIA’s core

constituency consists of firms that operate as clearing members in global derivatives markets, including firms

registered with the Commission as FCMs.

2 17 CFR 140.99. Commission regulations referred to in this interpretation may be found at 17 CFR Chapter I and

are available through the Commission’s website, www.cftc.gov.

3 The terms “foreign futures” and “foreign options” are defined in Commission Regulation 30.1 to generally mean

any futures or option positions made, or to be made, on or subject to the rules of any foreign board of trade. 17 CFR

30.1.

CFTC Letter No. 25-38 Interpretative November 25, 2025

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by local law to obtain title to, or a right of re-use over,4 the Customer Securities (the “Request for

Interpretation”).

I.

Regulatory Background

Section 4(b) of the Commodity Exchange Act (“CEA”)5 grants the Commission authority to

regulate an FCM’s foreign futures and foreign options activity.6 The Commission has

implemented this statutory authority through its Part 30 regulations.7

As part of this regulatory authority, Commission Regulation 30.7 sets forth requirements regarding

an FCM’s treatment and holding of funds deposited by customers as margin for foreign futures

and foreign options transactions and positions (“30.7 Customers”).8 The requirements include an

obligation for an FCM to maintain at all times a sufficient amount of funds in specially designated

accounts to satisfy the total account balances of all 30.7 Customers (“30.7 Customer Funds”).9

The 30.7 Customer Funds also must be held by depositories specified by the regulations

(“Permitted Depositories”) and titled under account names that clearly identify the funds as

belonging to 30.7 Customers.10 Commission Regulation 30.7 further requires an FCM to obtain

ds in specially designated

accounts to satisfy the total account balances of all 30.7 Customers (“30.7 Customer Funds”).9

The 30.7 Customer Funds also must be held by depositories specified by the regulations

(“Permitted Depositories”) and titled under account names that clearly identify the funds as

belonging to 30.7 Customers.10 Commission Regulation 30.7 further requires an FCM to obtain

from each Permitted Depository an acknowledgment letter that includes a provision specifying

that the 30.7 Customer Funds must be treated by the depository in accordance with Section 4(b)

of the Act and Commission Regulation 30.7.11

Commission Regulation 30.7 also limits the amount of 30.7 Customer Funds that an FCM may

deposit with certain Permitted Depositories located outside of the U.S. Pursuant to Commission

4 The term “right of use” or “right to re-use” in this interpretation refers to a customer granting a legal right to use

Customer Securities transferred to a foreign intermediary as margin collateral, but only under specific conditions

outlined in an agreement between the parties.

5 7 U.S.C. 1 et. seq. The CEA may also be accessed through the Commission’s website, www.cftc.gov.

6 7 U.S.C. 6(b). CEA Section 4(b)(2)(A) (7 U.S.C. 6(b)(2)(A)) states, in relevant part, that the Commission may

adopt regulations requiring the safeguarding of customer funds by any person located in the U.S. who engages in the

offer or sale of futures contracts or options on futures contracts that are made on, or subject to the rules of, a board

of trade, exchange, or market located outside of the U.S.

7 17 CFR Part 30.

8 17 CFR 30.7. Commission Regulation 30.1 defines the term “30.7 customer” to include both U.S. and non-U.S.

persons who trade foreign futures or foreign options through an FCM. 17 CFR 30.1.

9 17 CFR 30.7(a)

of futures contracts or options on futures contracts that are made on, or subject to the rules of, a board

of trade, exchange, or market located outside of the U.S.

7 17 CFR Part 30.

8 17 CFR 30.7. Commission Regulation 30.1 defines the term “30.7 customer” to include both U.S. and non-U.S.

persons who trade foreign futures or foreign options through an FCM. 17 CFR 30.1.

9 17 CFR 30.7(a). Commission Regulation 30.1 defines the term “30.7 customer funds” to mean any money,

securities, or other property received by an FCM from, for, or on behalf of 30.7 Customers to margin, guarantee, or

secure foreign futures or foreign option positions. 17 CFR 30.1.

10 17 CFR 30.7(b). Permitted depositories are limited to banks or trust companies located in the U.S.; banks or trust

companies located in non-U.S. jurisdictions that have in excess of $1 billion of regulatory capital; FCMs registered

with the Commission; Commission designated clearing organizations; clearing organizations of foreign boards of

trade; members of foreign boards of trade; or designated depositories of members of foreign boards of trade or

foreign clearing organizations.

11 17 CFR 30.7(d) and Appendix E to Part 30.

CFTC Letter No. 25-38 Interpretative November 25, 2025

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Regulation 30.7(c), an FCM may deposit with a foreign broker a maximum of 120 percent of the

total amount of margin required by the foreign broker for the foreign futures and foreign options

positions of 30.7 Customers.12

The restrictions that are most relevant to FIA’s Request for Interpretation, however, are: (i) that an

FCM must deposit 30.7 Customer Funds under the laws and regulations of the foreign jurisdiction

that provide the greatest degree of protection to such funds, and (ii) that an FCM may not waive

any of the protections afforded 30.7 Customer Funds under the laws of the foreign jurisdiction

(collectively, the “Customer Funds Restrictions”).13 The Commission adopted the Customer

Funds Restrictions in 2013 as part of the overall enhancem

er the laws and regulations of the foreign jurisdiction

that provide the greatest degree of protection to such funds, and (ii) that an FCM may not waive

any of the protections afforded 30.7 Customer Funds under the laws of the foreign jurisdiction

(collectively, the “Customer Funds Restrictions”).13 The Commission adopted the Customer

Funds Restrictions in 2013 as part of the overall enhancement of the protections afforded to

customers, including the holding of their funds.14 The Customer Funds Restrictions were also

adopted in response to a dispute in an FCM bankruptcy proceeding concerning the legal status of

Customer Securities that were deposited by the FCM with its foreign broker affiliate as margin for

30.7 Customers’ foreign futures and foreign options positions. The Trustee for the FCM in the

bankruptcy proceeding asserted that the Customer Securities should be returned by the foreign

affiliate to the 30.7 Customers as protected client assets under relevant foreign law. The

administrator for the foreign affiliate that was in an insolvency proceeding under local law,

however, appeared to claim that the FCM opted out of the standard client asset protection regime

and elected an alternative legal structure under local law. The alternative regime, if elected, would

involve an absolute title transfer of the Customer Securities to the foreign affiliate and would have

further resulted in the FCM and 30.7 Customers effectively becoming general creditors in the event

of the insolvency of the foreign affiliate.15 The Customer Funds Restrictions are intended to ensure

that an FCM maintains 30.7 Customer Funds with foreign intermediaries consistent with

applicable customer asset protections offered in the foreign jurisdictions and does not elect

alternative regimes that provide less protection to 30.7 Customer Funds in the event of the

insolvency of a foreign intermediary

ncy of the foreign affiliate.15 The Customer Funds Restrictions are intended to ensure

that an FCM maintains 30.7 Customer Funds with foreign intermediaries consistent with

applicable customer asset protections offered in the foreign jurisdictions and does not elect

alternative regimes that provide less protection to 30.7 Customer Funds in the event of the

insolvency of a foreign intermediary.

Commission staff also issued two no-action letters for an FCM depositing Customer Securities

with a foreign broker affiliate under a right of re-use.16 In discussing the facts presented in the

12 17 CFR 30.7(c). Commission Regulation 30.7(c) limits the amount of 30.7 customer funds that may be deposited

with any non-U.S. depository to the amount of margin required for the 30.7 customers’ foreign futures and foreign

option positions, plus an additional 20 percent of the required margin to minimize the frequency of transfers

between U.S. and non-U.S. depositories. MPD staff, however, issued a no-action position for FCM deposits of 30.7

Customer Funds with non-U.S. banks and non-U.S. clearing organizations that otherwise meet the qualifications as a

Permitted Depository from the restriction. CFTC Staff Letter No. 14-138 (Nov. 13, 2014), available at:

https://www.cftc.gov/sites/default/files/idc/groups/public/@lrlettergeneral/documents/letter/14-138.pdf.

13 17 CFR 30.7(c).

14 Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and

Derivatives Clearing Organizations, 78 FR 68506 (Nov. 14, 2013).

15 Report of the Trustee’s Investigation and Recommendations, In re MF Global, Inc., Debtor, Case No. 11-2790

(MG) (SIPA), (Bankr. S.D.N.Y). The legal dispute was ultimately settled by the parties.

16 CFTC Staff Letter No. 16-88 (Dec. 19, 2016), available at: https://www.cftc.gov/csl/16-88/download, as modified

by CFTC Staff Letter No. 18-26 (Oct. 31, 2018), available at: https://www.cftc.gov/csl/18-26/download. Letter 16-

stigation and Recommendations, In re MF Global, Inc., Debtor, Case No. 11-2790

(MG) (SIPA), (Bankr. S.D.N.Y). The legal dispute was ultimately settled by the parties.

16 CFTC Staff Letter No. 16-88 (Dec. 19, 2016), available at: https://www.cftc.gov/csl/16-88/download, as modified

by CFTC Staff Letter No. 18-26 (Oct. 31, 2018), available at: https://www.cftc.gov/csl/18-26/download. Letter 16-

CFTC Letter No. 25-38 Interpretative November 25, 2025

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request for a no-action position, staff stated that Commission regulations prohibit an FCM from

transferring Customer Securities by title transfer. Staff Letters 16-88 and 18-26, however, were in

response to specific facts and circumstances applicable to the regulatory requirements of the

United Kingdom, including the applicable title transfer and right of re-use requirements, and were

not intended to represent the Division’s views with respect to all circumstances involving title

transfer, including situations where title transfer or right of re-use is authorized or required under

the applicable local regulatory regime and/or rules of the foreign board of trade or foreign clearing

organization.

II.

Summary of the Request for Interpretation

FIA’s Request for Interpretation seeks clarification and confirmation that an FCM would not be in

violation of its obligations under Commission Regulation 30.7 and the Customer Funds

Restrictions, and a foreign broker or foreign clearing organization that is a Permitted Depository

under Commission Regulation 30.7(b) would not be in violation of its obligations under the

acknowledgment letter required by Commission Regulation 30.7(d), if the foreign broker or a

foreign clearing organization were to take title to, or invoke a right of re-use over, Customer

Securities that the FCM deposits to margin the foreign future and foreign option positions of 30.7

Customers

ository

under Commission Regulation 30.7(b) would not be in violation of its obligations under the

acknowledgment letter required by Commission Regulation 30.7(d), if the foreign broker or a

foreign clearing organization were to take title to, or invoke a right of re-use over, Customer

Securities that the FCM deposits to margin the foreign future and foreign option positions of 30.7

Customers. The Request for Interpretation specifies that any title transfer or right of re-use must

be authorized or required under the applicable local regulatory regime or rules of the foreign board

of trade or foreign clearing organization, and that the Customer Securities may be used or re-used

by the foreign broker or foreign clearing organization solely for the purpose of margining or

securing 30.7 Customer obligations arising from 30.7 Customers’ foreign futures and foreign

option positions.

In support of its Request for Interpretation, FIA asserts that FCMs are currently operating in

foreign futures markets at a significant disadvantage to their foreign competitors, including

competitors located, or participating on markets located, in the European Union and United

Kingdom. FIA states that firms operating in non-U.S. jurisdictions are not constrained in their

ability under applicable foreign law to post securities belonging to customers with other foreign

brokers or foreign clearing organizations as margin for customer positions. In addition, FIA notes

that certain jurisdictions in Europe and Asia affirmatively require clearing members of a foreign

board of trade to transfer title of customer securities deposited as margin funds to foreign clearing

organizations.

FIA also represents that the competitive disadvantage is heightened by the fact that most

institutional customers of FCMs prefer to meet margin requirements for foreign futures and foreign

options positions with securities, consisting primarily of U.S. Treasury securities and other highly

liquid foreign sovereign debt securities

ies deposited as margin funds to foreign clearing

organizations.

FIA also represents that the competitive disadvantage is heightened by the fact that most

institutional customers of FCMs prefer to meet margin requirements for foreign futures and foreign

options positions with securities, consisting primarily of U.S. Treasury securities and other highly

liquid foreign sovereign debt securities. FIA notes that as of July 2025, FCMs collectively held

88 and Letter 18-26 were issued by staff in MPD’s predecessor division, the Division of Swap Dealer and

Intermediary Oversight.

CFTC Letter No. 25-38 Interpretative November 25, 2025

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$55.2 billion of 30.7 Customer Funds for trading foreign futures and foreign options, with

approximately $22.7 billion comprised of Customer Securities.17

FIA further argues that due to the uncertainty stemming from Staff Letters 16-88 and 18-26, many

FCMs feel compelled to either limit their 30.7 Customers’ ability to deposit Customer Securities

as margin for foreign futures and foreign option positions or to source cash from the FCMs’

residual interest in the 30.7 Customer accounts to meet margin obligations to foreign brokers or

foreign clearing organizations. Alternatively, FIA states that FCMs must require their 30.7

Customers to post cash as margin, limit their 30.7 Customers’ activity on foreign markets, or accept

Customer Securities as margin without being able to pass the securities on to foreign brokers or

foreign clearing organizations that operate in title transfer regimes. FIA asserts that none of these

options are desirable or serve the interest of the FCMs or their 30.7 Customers as the options raise

significant funding challenges to FCMs and may result in increased costs or reduced access to

foreign markets and clearing for 30.7 Customers.

FIA also states that its Request for Interpretation is consistent with longstanding Commission

guidance

ansfer regimes. FIA asserts that none of these

options are desirable or serve the interest of the FCMs or their 30.7 Customers as the options raise

significant funding challenges to FCMs and may result in increased costs or reduced access to

foreign markets and clearing for 30.7 Customers.

FIA also states that its Request for Interpretation is consistent with longstanding Commission

guidance. FIA notes that in October 2000, the Commission revised an interpretation regarding the

holding of 30.7 Customer funds contained in Appendix B to Part 30.18 Prior to the October 2000

revision of Appendix B, the Commission interpreted Commission Regulation 30.7 to require each

FCM to deposit proprietary funds in a designated 30.7 Customer segregated account (i.e., set aside

proprietary funds in a “Mirror Account”) in the event that the FCM became aware of facts leading

it to conclude that 30.7 Customer Funds were not being handled by the initial depository (e.g., a

foreign broker), or any subsequent depository, in a manner consistent with the requirements of

Commission Regulation 30.7.19

The October 2000 revisions to Appendix B eliminated the Mirror Account requirement provided

that the FCM obtains the acknowledgment letter specified in Commission Regulation 30.7(d) from

the initial Permitted Depository and provides the 30.7 Customers with specific disclosures

regarding the risks of trading on foreign markets. The specific disclosure that an FCM is required

to provide include statements informing 30.7 Customers that: (i) the CFTC does not regulate the

17 Request for Interpretation at fn. 4 (referring to Selected FCM Financial Data as of July 31, 2025 available here).

Customer-owned securities and securities purchased with 30.7 Customer Funds represented approximately $14.7

billion and $6 billion, respectively, of the $22.7 billion in securities held by FCMs in July 2025.

FCMs are permitted by Commission Regulation 30.7(h) to invest 30.7 Customer funds in U.S

erpretation at fn. 4 (referring to Selected FCM Financial Data as of July 31, 2025 available here).

Customer-owned securities and securities purchased with 30.7 Customer Funds represented approximately $14.7

billion and $6 billion, respectively, of the $22.7 billion in securities held by FCMs in July 2025.

FCMs are permitted by Commission Regulation 30.7(h) to invest 30.7 Customer funds in U.S. Treasury securities

and obligations fully guaranteed as to principal and interest by the U.S.; municipal securities; U.S. agency

obligations; U.S. Government money market funds; exchange-traded funds comprised of short-term U.S. Treasury

securities; and general sovereign debt obligations of Canada, France, Germany, Japan, and the U.K. 17 CFR

30.7(h).

18 Foreign Futures and Foreign Options Transactions, 65 FR 60558, 60559 (Oct. 11, 2000), codified as Appendix B

to Commission Rule 30.7 (“Appendix B”).

19 The Mirror Account helped ensure that an FCM would meet its obligations to 30.7 Customers in the event of the

insolvency of the FCM and the failure of the depository to return the 30.7 Customer Funds.

CFTC Letter No. 25-38 Interpretative November 25, 2025

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activities of foreign exchanges, including the execution and clearing of transactions; (ii)

transactions on foreign markets may be subject to foreign regulations which offer different or

diminished investor protections than Commission regulations and thus may expose the 30.7

Customers to additional risk; and (iii) 30.7 Customer Funds may not be provided the same

protections as funds deposited to margin positions on CFTC-regulated markets.20 The disclosures

further provide that 30.7 Customers should familiarize themselves with the foreign rules that will

apply to their transactions before trading on foreign markets.21

FIA asserts that, provided that a foreign regime has adopted rules protecting the value of securities

over which title has been transferred in the event of an insolvency, it believes that an FCM may

deposit Customer Securi

closures

further provide that 30.7 Customers should familiarize themselves with the foreign rules that will

apply to their transactions before trading on foreign markets.21

FIA asserts that, provided that a foreign regime has adopted rules protecting the value of securities

over which title has been transferred in the event of an insolvency, it believes that an FCM may

deposit Customer Securities with foreign brokers and foreign clearing organizations operating

under such rules, consistent with the requirements of Commission Regulation 30.7 and Appendix

B to Part 30. FIA states that the requested relief would allow FCMs to more readily compete on

foreign markets and would bring meaningful savings to FCMs and 30.7 Customers, as FCMs

would be able to accept and use Customer Securities to margin positions of 30.7 Customers

without having to finance offshore margin deposits with proprietary cash.

III.

MPD Staff Interpretation

Based on the facts presented in the Request for Interpretation, the Division confirms that:

(1)

An FCM is not in violation of Commission Regulation 30.7 if it transfers Customer

Securities to a foreign broker, foreign board of trade, or foreign clearing organization under

a title transfer or right of re-use, provided that such title transfer or right of re-use is

authorized or required under the applicable local regulatory regime and/or rules of the

foreign board of trade or foreign clearing organization and the Customer Securities are

being transferred solely for purposes of margining or securing 30.7 Customer obligations

arising from 30.7 Customers’ foreign futures and foreign options positions; and

ded that such title transfer or right of re-use is

authorized or required under the applicable local regulatory regime and/or rules of the

foreign board of trade or foreign clearing organization and the Customer Securities are

being transferred solely for purposes of margining or securing 30.7 Customer obligations

arising from 30.7 Customers’ foreign futures and foreign options positions; and

(2)

A foreign broker or foreign clearing organization would not be in violation of its obligation

under the acknowledgment letter set forth in Appendix E to Part 30 if the foreign broker, a

foreign board of trade, or the foreign clearing organization takes title to, or invokes a right

of re-use over, Customer Securities deposited by an FCM, provided that title transfer or

right of re-use is authorized or required under the applicable local regulatory regime and/or

rules of the foreign board of trade or foreign clearing organization and the Customer

Securities are being transferred solely for purposes of margining or securing 30.7 Customer

obligations arising from 30.7 Customers’ foreign futures and foreign options positions.

20 17 CFR 1.55.

21 Id.

CFTC Letter No. 25-38 Interpretative November 25, 2025

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The Division is issuing this interpretation in recognition that the Part 30 regulations were

developed under Section 4b of the CEA to provide a framework for FCMs to provide their

customers with access to foreign future and options markets. As discussed above, the Part 30

framework is designed to both protect 30.7 Customers and to inform 30.7 Customers of potential

differences in regulatory requirements that may present risks to 30.7 Customers. The Division,

however, recognizes that foreign brokers, exchanges, and clearing organizations operate under

laws and regulations that may differ from the Commission’s, including the laws and regulations

regarding the holding of customer funds

o both protect 30.7 Customers and to inform 30.7 Customers of potential

differences in regulatory requirements that may present risks to 30.7 Customers. The Division,

however, recognizes that foreign brokers, exchanges, and clearing organizations operate under

laws and regulations that may differ from the Commission’s, including the laws and regulations

regarding the holding of customer funds. The Customer Funds Restrictions discussed above are

intended to ensure that 30.7 Customer Funds are held in accordance with the applicable laws and

regulations governing the holding of customer funds deposited for trading futures and options on

futures in the relevant foreign jurisdictions and are used by the FCM and foreign intermediaries

solely to margin 30.7 Customers’ foreign futures and foreign options positions.

This interpretation also addresses any legal uncertainty arising from Staff Letters 16-88 and 18-

26. Confirmation from the Division that the title transfer of Customer Securities is not subject to

an outright prohibition under Commission Regulation 30.7 will remove the competitive

disadvantages that FCMs experience with respect to customers trading on foreign markets that are

discussed above. This confirmation and interpretation also have the potential to make foreign

futures markets more readily available to 30.7 Customers and reduce costs to 30.7 Customers and

FCMs.

This interpretation represents the position of the Division and does not necessarily represent the

views of the Commission or those of any other division or office of the Commission. This letter

and the interpretation set forth herein are based upon the facts and circumstances represented to

the staff of the Division. Any different, changed, or omitted material facts or circumstances may

require a different position or render this letter void

ivision and does not necessarily represent the

views of the Commission or those of any other division or office of the Commission. This letter

and the interpretation set forth herein are based upon the facts and circumstances represented to

the staff of the Division. Any different, changed, or omitted material facts or circumstances may

require a different position or render this letter void. As with all interpretative letters, the Division

retains the authority to condition further, modify, suspend, terminate, or otherwise restrict the

interpretation provided herein, in its discretion.

Sincerely,

___________________________________

Thomas J. Smith

Acting Director

Market Participants Division