[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR1.20]

[Page 63-64]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 1_GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT--Table 
of Contents
 
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

[[Page 64]]

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 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]