Editorial Note on Part 1
Editorial Note: Nomenclature changes to part 1 appear at 89 FR 71805, Sept. 4, 2024.

§ 1.49 Denomination of customer funds and location of depositories. ( a ) *Definitions.* For purposes of this section: ( 1 ) *Money center country.* This term means Canada, France, Italy, Germany, Japan, and the United Kingdom.
( 2 ) *Money center currency.* This term means the currency of any money center country and the Euro.
( b ) *Permissible denominations of obligations.* ( 1 ) Subject to the terms and conditions set forth in this section, a futures commission merchant's obligations to a customer shall be denominated: ( i ) In the United States dollar;
( ii ) In a currency in which funds were deposited by the customer or were converted at the request of the customer, to the extent of such deposits and conversions; or
( iii ) In a currency in which funds have accrued to the customer as a result of trading conducted on a designated contract market, to the extent of such accruals.
( 2 ) ( i ) A futures commission merchant shall prepare and maintain a written record of each transaction converting customer funds from one currency to another.
( ii ) A written record prepared under paragraph (b)(2)(i) of this section must include the date the transaction was executed, the currencies converted, the amount converted, and the resulting amount.
( iii ) The information required under paragraph (b)(2)(ii) of this section must be provided to the customer upon the customer's request.
( c ) *Permissible locations of depositories.* ( 1 ) Unless a customer provides instructions to the contrary, a futures commission merchant or a derivatives clearing organization may hold customer funds: ( i ) In the United States;
( ii ) In a money center country; or
( iii ) In the country of origin of the currency.
( 2 ) A futures commission merchant or derivatives clearing organization may hold customer funds outside the United States, in a jurisdiction that is not a money center country, or the country of origin of the currency only to the extent authorized by the customer, *provided,* that the futures commission merchant or derivatives clearing organization must make and maintain a written record of such authorization. Notwithstanding the foregoing, in no event shall a futures commission merchant or a derivatives clearing organization hold customer funds in a restricted country subject to sanctions by the Office of Foreign Assets Control of the U.S. Department of Treasury.
( d ) *Qualifications for depositories.* ( 1 ) To hold customer funds required to be segregated pursuant to the Act and §§ 1.20 through 1.30, 1.32 and 1.36, a depository must provide the depositing futures commission merchant or derivatives clearing organization with the appropriate written acknowledgment as required under §§ 1.20 and 1.26.
( 2 ) A depository, if located in the United States, must be: ( i ) A bank or trust company;
( ii ) A futures commission merchant registered as such with the Commission; or
( iii ) A derivatives clearing organization.
( 3 ) A depository, if located outside the United States, must be: ( i ) A bank or trust company that has in excess of $1 billion of regulatory capital;
( ii ) A futures commission merchant that is registered as such with the Commission; or
( iii ) A derivatives clearing organization.
( e ) *Segregation requirements.* ( 1 ) Each futures commission merchant and each derivatives clearing organization must, as of the close of each business day, hold in segregated accounts on behalf of commodity or option customers: ( i ) Sufficient United States dollars, held in the United States, to meet all United States dollar obligations; and
( ii ) Sufficient funds in each other currency to meet obligations in such currency.
( 2 ) Notwithstanding paragraph (e)(1)(ii) of this section, assets denominated in one currency may be held to meet obligations denominated in another currency as follows: ( i ) United States dollars may be held in the United States or in money center countries to meet obligations denominated in any other currency; and
( ii ) Funds in money center currencies may be held in the United States or in money center countries to meet obligations denominated in currencies other than the United States dollar.
( 3 ) Each futures commission merchant and each derivatives clearing organization shall make and maintain records sufficient to demonstrate compliance with this paragraph (e).
[68 FR 5551, Feb. 4, 2003, as amended at 76 FR 44264, July 25, 2011; 77 FR 66330, Nov. 2, 2012]