LSOC Implementation and Clearing Mandate

The Asset Management Group of SIFMA (SIFMA AMG), the Investment Company Institute (ICI), and the Investment Adviser Association (IAA) provide comments to the Commodity Futures Trading Commission (CFTC) expressing concern with respect to the incomplete implementation of the protections provided to customer excess margin held by futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) under the “legal segregation with operational commingling” (LSOC) model adopted by the CFTC.  

To ensure that customers benefit from the full margin protections offered by the LSOC model, the groups request that the CFTC Division of Clearing and Risk delay the deadline for mandatory clearing by Category 2 entities until September 9, 2013 (the deadline for Category 3 entities) to allow DCOs and FCMs the necessary time to implement the technological systems to provide these critical protections.