17 CFR 1.73 - Clearing futures commission merchant risk management.

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There are 2 Updates appearing in the Federal Register for 17 CFR 1. View below or at eCFR (GPOAccess)
§ 1.73 Clearing futures commission merchant risk management.
(a) Each futures commission merchant that is a clearing member of a derivatives clearing organization shall:
(1) Establish risk-based limits in the proprietary account and in each customer account based on position size, order size, margin requirements, or similar factors;
(2) Screen orders for compliance with the risk-based limits in accordance with the following:
(i) When a clearing futures commission merchant provides electronic market access or accepts orders for automated execution, it shall use automated means to screen orders for compliance with the limits;
(ii) When a clearing futures commission merchant accepts orders for non-automated execution, it shall establish and maintain systems of risk controls reasonably designed to ensure compliance with the limits;
(iii) When a clearing futures commission merchant accepts transactions that were executed bilaterally and then submitted for clearing, it shall establish and maintain systems of risk management controls reasonably designed to ensure compliance with the limits;
(iv) When a firm executes an order on behalf of a customer but gives it up to another firm for clearing,
(A) The clearing futures commission merchant shall establish risk-based limits for the customer, and enter into an agreement in advance with the executing firm that requires the executing firm to screen orders for compliance with those limits in accordance with paragraph (a)(2)(i) or (ii) as applicable; and
(B) The clearing futures commission merchant shall establish and maintain systems of risk management controls reasonably designed to ensure compliance with the limits.
(v) When an account manager bunches orders on behalf of multiple customers for execution as a block and post-trade allocation to individual accounts for clearing:
(A) The futures commission merchant that initially clears the block shall establish risk-based limits for the block account and screen the order in accordance with paragraph (a)(2)(i) or (ii) as applicable;
(B) The futures commission merchants that clear the allocated trades on behalf of customers shall establish risk-based limits for each customer and enter into an agreement in advance with the account manager that requires the account manager to screen orders for compliance with those limits; and
(C) The futures commission merchants that clear the allocated trades on behalf of customers shall establish and maintain systems of risk management controls reasonably designed to ensure compliance with the limits.
(3) Monitor for adherence to the risk-based limits intra-day and overnight;
(4) Conduct stress tests under extreme but plausible conditions of all positions in the proprietary account and in each customer account that could pose material risk to the futures commission merchant at least once per week;
(5) Evaluate its ability to meet initial margin requirements at least once per week;
(6) Evaluate its ability to meet variation margin requirements in cash at least once per week;
(7) Evaluate its ability to liquidate, in an orderly manner, the positions in the proprietary and customer accounts and estimate the cost of the liquidation at least once per quarter; and
(8) Test all lines of credit at least once per year.
(b) Each futures commission merchant that is a clearing member of a derivatives clearing organization shall:
(1) Establish written procedures to comply with this regulation; and
(2) Keep full, complete, and systematic records documenting its compliance with this regulation.
(3) All records required to be maintained pursuant to these regulations shall be maintained in accordance with Commission Regulation 1.31 (17 CFR 1.31) and shall be made available promptly upon request to representatives of the Commission and to representatives of applicable prudential regulators.
[77 FR 21306, Apr. 9, 2012]

Title 17 published on 2014-04-01

The following are only the Rules published in the Federal Register after the published date of Title 17.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2014-07-30; vol. 79 # 146 - Wednesday, July 30, 2014
    1. 79 FR 44125 - Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations; Correction
      GPO FDSys XML | Text
      COMMODITY FUTURES TRADING COMMISSION
      Correcting Amendments.
      Effective on July 30, 2014.
      17 CFR Parts 1, 30, and 140

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.


United States Code
U.S. Code: Title 7 - AGRICULTURE

§ 1a - Definitions

§ 2 - Jurisdiction of Commission; liability of principal for act of agent; Commodity Futures Trading Commission; transaction in interstate commerce

§ 5 - Findings and purpose

§ 6 - Regulation of futures trading and foreign transactions

§ 6a - Excessive speculation

§ 6b - Contracts designed to defraud or mislead

§ 6c - Prohibited transactions

§ 6e - Dealings by unregistered floor trader or broker prohibited

§ 6f - Registration and financial requirements; risk assessment

§ 6g - Reporting and recordkeeping

§ 6h - False self-representation as registered entity member prohibited

§ 6i - Reports of deals equal to or in excess of trading limits; books and records; cash and controlled transactions

§ 6j - Restrictions on dual trading in security futures products on designated contract markets and registered derivatives transaction execution facilities

§ 6k - Registration of associates of futures commission merchants, commodity pool operators, and commodity trading advisors; required disclosure of disqualifications; exemptions for associated persons

7 U.S. Code § -

§ 6m - Use of mails or other means or instrumentalities of interstate commerce by commodity trading advisors and commodity pool operators; relation to other law

§ 6n - Registration of commodity trading advisors and commodity pool operators; application; expiration and renewal; record keeping and reports; disclosure; statements of account

7 U.S. Code § -

§ 6p - Standards and examinations

§ 6r - Reporting and recordkeeping for uncleared swaps

§ 7 - Designation of boards of trade as contract markets

§ 7a - Repealed.

§ 7b - Suspension or revocation of designation as registered entity

§ 8 - Application for designation as contract market or derivatives transaction execution facility; time; suspension or revocation of designation; hearing; review by court of appeals

§ 9 - Prohibition regarding manipulation and false information

§ 10 - Repealed. June 25, 1948, ch. 646,

§ 12 - Public disclosure

§ 12a - Registration of commodity dealers and associated persons; regulation of registered entities

§ 12c - Disciplinary actions

§ 13a - Nonenforcement of rules of government or other violations; cease and desist orders; fines and penalties; imprisonment; misdemeanor; separate offenses

7 U.S. Code § 12–1 to 12–3 - Omitted

§ 16 - Commission operations

§ 16a - Service fees and National Futures Association study

§ 21 - Registered futures associations

§ 23 - Standardized contracts for certain commodities

§ 24 - Customer property with respect to commodity broker debtors; definitions

Title 17 published on 2014-04-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 17 CFR 1 after this date.

  • 2014-07-30; vol. 79 # 146 - Wednesday, July 30, 2014
    1. 79 FR 44125 - Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations; Correction
      GPO FDSys XML | Text
      COMMODITY FUTURES TRADING COMMISSION
      Correcting Amendments.
      Effective on July 30, 2014.
      17 CFR Parts 1, 30, and 140