The CFTC’s Division of Clearing and Risk issued a no-action letter on 5 November saying a derivatives clearing organization may use a trust company for daily settlements with clearing members, as long as it treats the trust company as it would a settlement bank.
The letter answers a request from Nodal Clear, LLC dated 29 October. Commission Regulation 39.14 defines a settlement bank as a bank and never mentions trust companies. The Division will not recommend enforcement action against a clearinghouse that uses a trust company and applies to it the evaluation and monitoring duties in Regulation 39.14(c) and (d).
Nodal’s stated reason is digital assets. It told the Division that state-regulated trust companies are among the leading custodians of digital assets, and that the clarification would let clearinghouses accept such assets as margin collateral by fitting them into existing daily collateral workflows. It also pointed to Section 4d of the Commodity Exchange Act, which already allows customer funds to be held with a bank or a trust company.
The position has limits. It reflects the views of the Division only and does not bind the Commission. It rests on the facts Nodal represented, concerns enforcement only, and can be modified, suspended or ended by the Division.
In our reading, the practical change falls on custody and collateral operations. A trust company that already holds tokenised assets can now sit on the settlement side of the daily cash movement, which connects to the ownership-record question we raised in Tokenised Collateral at CCPs Will Turn on Which Record Proves Ownership. It also adds a settlement route alongside the registration category the agency floated in CFTC Seeks Comment on a Registration Category for Crypto Asset Markets. The letter names no trust companies, so each clearinghouse still has to run its own review before it moves a settlement.
Source: CFTC Release 9322-26
