The CFTC says clearinghouses can use trust companies for daily settlements, provided those firms are held to the same rules as settlement banks. Previously, the settlement option was limited to banks.
Why it matters
The change gives clearinghouses another type of institution through which to settle daily obligations. Trust companies must meet the same rules as settlement banks to participate.
Market impact
The expanded choice is relevant to clearinghouses and firms providing settlement services. The CFTC's condition keeps the applicable settlement-bank rules central to the arrangement.
Frequently asked questions
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What condition must trust companies meet to handle daily settlements?
They must be held to the same rules as settlement banks.
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Which institutions previously handled the daily settlements?
The daily settlement option was previously limited to banks.
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Who can use trust companies under the CFTC change?
Clearinghouses can use trust companies for daily settlements if the firms are held to the same rules as settlement banks.
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Does the change remove settlement-bank rules?
No. Trust companies handling daily settlements must be held to the same rules as settlement banks.
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Why does the change matter to clearinghouses?
It gives them another type of institution through which to run daily settlements.
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