On May 13, 2016, the CFTC issued a report on moving the residual interest deadline (RID), the deadline for future commission merchants (FCMs) to top up under-margined customer futures accounts as required under CFTC Regulation 1.22, from 6:00 pm (ET) on the settlement date to time of settlement.

The RID mandates when the FCM must ensure the residual interest is held and affects when customers must post margin. CFTC Regulation 1.22 requires FCMs to maintain a "residual interest," defined as a sufficient amount of its own capital in segregated accounts to cover the under-margined amount in futures customers’ trading accounts as of the close of trading on the previous business day.

Under Regulation 1.22, absent CFTC action, the phased-in period for the RID was set to automatically terminate on December 31, 2018, changing the deadline from 6:00 pm (ET) on the settlement date to the time of settlement or to some other time of day. Amended Regulation 1.22 mandates a public roundtable and a published report for public comment by May 16, 2016 to address the practicability of changing the RID, as contemplated.

In March 2015, the CFTC amended CFTC Regulation 1.22 to remove the automatic termination of the 6:00 pm deadline that has been in place during the phase-in period (see Legal Update, CFTC Nixes Change to FCM Residual Interest Deadline under Regulation 1.22). Therefore, the FCM deadline remains at 6:00 pm (ET) on the following business day after the computation is made, unless the CFTC determines to change it through a separate rulemaking.

The current report concluded that CFTC staff has no basis to believe that changing the deadline to the time of settlement, or to some other time of day, would be practicable for FCMs or their customers at this time. However, under Regulation 1.22(c)(5), the CFTC was still required to host a roundtable on the issue of the timing of the deadline.

The roundtable was held on March 2, 2016 and participants and other members of the public were invited to submit comments regarding the timing of the RID until March 31, 2016.

CFTC Chairman Timothy Massad noted that the comments received by the CFTC largely supported maintaining the current deadline.

The CFTC is accepting comments on this report until June 13, 2016.