Two recent letters from the CFTC staff hold that, beginning October 14, 2016, its regulations will prohibit investment of client funds by futures commission merchants (“FCMs”) and derivatives clearing organizations (“DCOs”) in prime money market funds (“Prime MMFs”). Although the staff’s positions are clearly articulated, I found their relationship to Regulation 1.25 questionable.
Continue Reading CFTC Limits Investment of Client Funds to Government Money Market Funds

On October 22, 2015, the prudential banking regulators (which includes the OCC, FDIC and the Federal Reserve Board) approved the final version of the non-cleared swap margin rule (available here). We will be considering many aspects of this rule in a series of postings, but in this posting we focus on a single discrete issue:

Whether a money market mutual fund (“MMF”) constitutes eligible collateral that can be posted in respect of a non-cleared swap. 

The answer, of course, is it depends. In sum, a MMF will constitute eligible collateral, as long as the following conditions are met:
Continue Reading Margin on Non-Cleared Swaps – Are Money Market Funds Eligible Collateral?