Brian A. Bussey, Director
Division of Clearing and Risk
Commodity Futures Trading Commission
1155 21st Street NW
Washington DC 20581

Matthew B. Kulkin, Director
Division of Swap Dealer and Intermediary
Oversight
Commodity Futures Trading Commission
1155 21st Street NW
Washington DC 20581

Re: Commodity Futures Trading Commission Rules 1.56(b) and 39.13(g)(8)(iii) Request for Interpretation

Dear Messrs. Bussey and Kulkin:

The Asset Management Group of the Securities Industry and Financial Markets Association1 (“SIFMA AMG”) respectfully requests that the Division of Clearing and Risk (“DCR”) and the Division of Swap Dealer and Intermediary Oversight (“DSIO” and together with DCR, the “Divisions”) provide interpretations related to CFTC Rule 1.56(b) and CFTC Rule 39.13(g)(8)(iii) as set forth below. As the
Divisions are aware, SIFMA AMG has been in discussions with regard to the interpretations at issue and, therefore, in the interest of time and given the urgency of the request, this letter provides brief background information and focuses, instead, on the requested relief.

Interpretation with respect to Rule 1.56(b). As you are aware, Commodity Futures Trading Commission (“Commission” or “CFTC”) Rule 1.56(b) provides that a futures commission merchant (“FCM”) may not in any way represent that it will, with respect to any commodity interest in any account carried by the FCM: (i) guarantee a customer or noncustomer against loss; (ii) limit the loss of such customer or noncustomer; or (iii) not call for or attempt to collect required margin.2 On May 14, 2019, the Joint Audit Committee (“JAC”)3 published Regulatory Alert #19-03, providing the JAC’s “reading, interpretation and application” of Commission Rule 1.56(b). In particular, the JAC stated that, in its view, even in the case of a separate account of a beneficial owner managed by an independent asset manager, Rule 1.56(b) requires that an FCM “must have at all times the absolute right to look to funds in all accounts of the beneficial owner even accounts that are under different control, as well as the right to call the underlying beneficial owner for funds even if beyond the amount the beneficial owner has allocated to the asset manager(s).” [Emphasis supplied.]

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