SEC Releases Exemptive Order Related to Broker-Dealer Customer Protection Rule

The SEC has released an order that “provides for an exemption from the broker-dealer customer protection rule for a broker-dealer that is dually-registered as a futures commission merchant with the Commodity Futures Trading Commission (CFTC), and is a joint clearing member of the clearing agency and derivatives clearing organization.” Specifically, provided that certain conditions are met, the exemptive order permits such a broker-dealer to perform “customer cross-margining of cash market positions in U.S. Treasury securities cleared by a registered clearing agency and futures positions in U.S. Treasury securities cleared by a registered derivatives clearing organization.”

At the same time, the SEC issued a release approving a “proposed rule change filed by the Fixed Income Clearing Corporation (FICC) pursuant to which it would enter into a proposed Third Amended and Restated Cross-Margining Agreement with the Chicago Mercantile Exchange Inc. (CME) and incorporate that agreement into the FICC Government Securities Division rules, along with related rule changes.”

For more information about the exemptive order and proposed FICC rule change, see the press release on the SEC’s Web site.