[Title 17 CFR 1.20]
[Code of Federal Regulations (annual edition) - April 1, 2003 Edition]
[Title 17 - COMMODITY AND SECURITIES EXCHANGES]
[Chapter I - COMMODITY FUTURES TRADING COMMISSION]
[Part 1 - GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT]
[Sec. 1.20 - Customer funds to be segregated and separately accounted for.]
[From the U.S. Government Printing Office]


17COMMODITY AND SECURITIES EXCHANGES12003-04-012003-04-01false1.20Sec. 1.20COMMODITY AND SECURITIES EXCHANGESCOMMODITY FUTURES TRADING COMMISSIONGENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT
Sec. 1.20  Customer funds to be segregated and separately accounted for.

    (a) All customer funds shall be separately accounted for and 
segregated as belonging to commodity or option customers. Such customer 
funds when deposited with any bank, trust company, clearing organization 
or another futures commission merchant shall be deposited under an 
account name which clearly identifies them as such and shows that they 
are segregated as required by the Act and this part. Each registrant 
shall obtain and retain in its files for the period provided in 
Sec. 1.31 a written acknowledgment from such bank, trust company, 
clearing organization, or futures commission merchant, that it was 
informed that the customer funds deposited therein are those of 
commodity or option customers and are being held in accordance with the 
provisions of the Act and this part: Provided, however, that an 
acknowledgment need not be obtained from a clearing organization that 
has adopted and submitted to the Commission rules that provide for the 
segregation as customer funds, in accordance with all relevant 
provisions of the Act and the rules and orders promulgated thereunder, 
of all funds held on behalf of customers. Under no circumstances shall 
any portion of customer funds be obligated to a clearing organization, 
any member of a contract market, a futures commission merchant, or any 
depository except to purchase, margin, guarantee, secure, transfer, 
adjust or settle trades, contracts or commodity option transactions of 
commodity or option customers. No person, including any clearing 
organization or any depository, that has received customer funds for 
deposit in a segregated account, as provided in this section, may hold, 
dispose of, or use any such funds as belonging to any person other than 
the option or commodity customers of the futures commission merchant 
which deposited such funds.
    (b) All customer funds received by a clearing organization from a 
member of the clearing organization to purchase, margin, guarantee, 
secure or settle the trades, contracts or commodity options of the 
clearing member's commodity or option customers and all money accruing 
to such commodity or option customers as the result of trades, contracts 
or commodity options so carried shall be separately accounted for and 
segregated as belonging to such commodity or option customers, and a 
clearing organization shall not hold, use or dispose of such customer 
funds except as belonging to such commodity or option customers. Such 
customer funds when deposited in a bank or trust company shall be 
deposited under an account name which clearly shows that they are the 
customer funds of the commodity or option customers of clearing members, 
segregated as required by the Act and

[[Page 62]]

these regulations. The clearing organization shall obtain and retain in 
its files for the period provided by Sec. 1.31 an acknowledgment from 
such bank or trust company that it was informed that the customer funds 
deposited therein are those of commodity or option customers of its 
clearing members and are being held in accordance with the provisions of 
the Act and these regulations.
    (c) Each futures commission merchant shall treat and deal with the 
customer funds of a commodity customer or of an option customer as 
belonging to such commodity or option customer. All customer funds shall 
be separately accounted for, and shall not be commingled with the money, 
securities or property of a futures commission merchant or of any other 
person, or be used to secure or guarantee the trades, contracts or 
commodity options, or to secure or extend the credit, of any person 
other than the one for whom the same are held: Provided, however, That 
customer funds treated as belonging to the commodity or option customers 
of a futures commission merchant may for convenience be commingled and 
deposited in the same account or accounts with any bank or trust 
company, with another person registered as a futures commission 
merchant, or with a clearing organization, and that such share thereof 
as in the normal course of business is necessary to purchase, margin, 
guarantee, secure, transfer, adjust, or settle the trades, contracts or 
commodity options of such commodity or option customers or resulting 
market positions, with the clearing organization or with any other 
person registered as a futures commission merchant, may be withdrawn and 
applied to such purposes, including the payment of premiums to option 
grantors, commissions, brokerage, interest, taxes, storage and other 
fees and charges, lawfully accruing in connection with such trades, 
contracts or commodity options: Provided, further, That customer funds 
may be invested in instruments described in Sec. 1.25.

(Approved by the Office of Management and Budget under control numbers 
3038-0007, and 3038-0024)

[46 FR 54518, Nov. 3, 1981, as amended at 46 FR 63035, Dec. 30, 1981; 50 
FR 36051, Sept. 5, 1985; 65 FR 78009, Dec. 13, 2000]