Two CFTC clearing letters create different permissions for trust-company settlements and cross-border collateral

Two US Commodity Futures Trading Commission staff letters issued seven weeks apart offer a revealing test of what regulatory flexibility in derivatives clearing actually means. The first, dated 17 September 2026, concerned a specific chain through which US futures commission merchants could hold customer-owned securities as margin for certain swaps cleared at Germany's Eurex Clearing, using Luxembourg-based Clearstream Banking S.A. The second, dated 5 November, responded to Nodal Clear's request to use trust companies in the daily settlement of clearing-member obligations. Both are described as no-action relief and both concern the infrastructure behind derivatives markets. But their legal reach, beneficiaries, customer safeguards and unresolved risks are materially different.[1][2][4]

Reading the two letters together establishes a useful distinction that can disappear in headlines about new custody and settlement technology. Permission to use a different institution to move settlement payments each day is not permission to deposit any form of customer collateral anywhere. Conversely, an exception permitting securities to be held through a particular foreign depository chain does not rewrite the definition of a settlement bank for the entire market. The Commission's staff addressed separate regulatory obstacles with separate sets of conditions. A broker, clearing member or infrastructure provider that treats the two permissions as interchangeable could misunderstand both.[2][4]

This investigation reconstructs the regulatory perimeter of the two letters, rather than claiming to have observed undisclosed customer transfers. There is no evidence in the documents of misappropriation, loss, an actual insolvency or a failed settlement attributable to either arrangement. The commercially significant finding is the asymmetry between a broadly usable but narrowly defined trust-company settlement position and a specifically named, highly conditioned collateral-custody exception. That asymmetry matters to brokers evaluating new clearing relationships, especially when digital-asset custody and cross-border collateral services are being marketed under familiar financial-services terminology.[2][4]

The September letter followed a particular securities chain

CFTC Letter 26-26 followed a request by Eurex Clearing AG, which operates a clearing infrastructure serving derivatives markets. The relevant proposed arrangement would permit futures commission merchants that clear through Eurex to place certain customer-owned securities used as margin for cleared swaps with Clearstream Banking S.A., commonly abbreviated CBL. Clearstream's position as an international central securities depository makes the arrangement more complicated than a brokerage's routine choice of domestic custody bank. The assets, jurisdictions and intermediaries in the chain matter because customers may need the property returned through several legal systems if a clearing member fails.[1][2][4]

The relief arose from particular restrictions under CFTC Regulations 1.49 and 22.9. Those provisions govern the safeguarding of customer property and permissible arrangements for cleared swaps. The letter acknowledges that Luxembourg, although a sophisticated EU financial centre, does not fit some of the standard geographic categories governing where certain customer securities may be held. CBL's status as a Luxembourg bank and central securities depository did not, on its own, eliminate the specified obstacles. The staff therefore provided conditional assurance that it would not recommend enforcement for the described structure, notwithstanding particular regulatory requirements.[1][2][4]

That is different from a determination that every asset moving through Clearstream enjoys uniform protection in every circumstance. The application represented that relevant securities would be protected from third-party creditor claims as they moved through the custody chain. Such representations form part of the factual basis on which staff considered the request; they do not amount to an independent judgment in hypothetical insolvency litigation across all affected jurisdictions. For the intermediary broker, assessing enforceability still requires scrutiny of custody agreements, applicable property law, acknowledgement letters and the mechanisms by which assets could be retrieved in a stress event.[1]

The scope is unusually specific. The position is limited to customer-owned securities held at CBL as collateral for customer swap transactions cleared through Eurex Clearing. It is not general authorisation for any futures commission merchant to place all customer cash, futures margin, crypto tokens or proprietary collateral at Clearstream. It does not permit every central securities depository outside the United States to perform the same role. Nor does the letter declare that all Eurex clearing products are within its scope. The customer account, instrument type, clearing venue and named depository are all parts of the approved factual configuration.[1]

A six-country securities perimeter and a fourteen-day failure clock

The September letter includes protections with measurable thresholds. Eligible customer-owned securities are restricted to instruments issued by governments or issuers located in six countries: Canada, France, Germany, Japan, the United Kingdom and the United States. That is a jurisdiction-of-issuer test, not an inference that any security listed on a venue in one of those countries qualifies. An intermediary would need to establish eligibility by reference to the actual security and its issuer before relying on the position.[1]

Eurex must also conduct due diligence at least annually on entities in the custody chains for those jurisdictions. An entity must be, as applicable, a bank with at least $1 billion of regulatory capital, a central securities depository regulated consistently with relevant international standards, or a central bank; it must also remain in good regulatory standing. The $1 billion figure is not a blanket capital minimum for every entity in the chain. It is one route through the specified eligibility test for a bank. Treating a regulated depository as if it had failed merely because its bank-capital measure was not shown would misstate the alternative conditions.[1][2][4]

The consequences of a failed test are concrete. Where Eurex determines that a custody-chain institution does not meet the specified standard, it must notify the Commission and its clearing members immediately, and that institution ceases to be an eligible depository for purposes of the relief within fourteen days. This is a compliance deadline, not proof that securities can invariably be moved and settled without market friction in fourteen calendar days. Actual transfers would still depend upon the chain's legal and operational arrangements. It raises a question for brokers holding relevant customer collateral: whether they have mapped eligible alternative locations and tested the time required to move securities under operational stress.[1]

Another condition is directed expressly at customers. Each affected futures commission merchant must supply a prospective customer with written disclosure explaining the Eurex clearing process, the risks of holding securities in foreign jurisdictions including depositories and sub-custodians, and the relevant US bankruptcy framework. An upstream clearing FCM carrying a non-clearing FCM omnibus customer account must take steps reasonably designed to ensure the downstream firm has provided that disclosure. The required acknowledgement from CBL under US customer-property rules adds another documentary control. These are not generic disclosures that any marketing page can replace with an attractive custody diagram.[1][2][4]

The November letter addressed daily settlement, not custody geography

CFTC Letter 26-30, issued on 5 November in response to an October 29 request from Nodal Clear LLC, arose from a textual difference in the rulebook. Section 4d of the Commodity Exchange Act and implementing rules for the protection of customer property refer to a 'bank or trust company' as a permissible place to hold certain customer assets. Regulation 39.14, addressing how derivatives clearing organisations conduct daily settlement with clearing members, defines a settlement bank in relevant part as 'a bank'. A trust company is not explicitly included in that operational definition. Nodal asked the Division of Clearing and Risk to address whether a trust company could perform the daily settlement function while being monitored as a settlement bank.[2][4]

The response reaches beyond the applicant in one sense. It states that the Division will not recommend enforcement against any derivatives clearing organisation that uses a trust company for daily settlements with clearing members, provided that the DCO treats the trust company as it would a settlement bank for compliance with Regulations 39.14(c) and (d). This is not a company-specific exemption for Nodal alone. It applies to the described conduct by any DCO that meets the conditions and relies on the stated facts. The letter nonetheless remains a staff no-action position, not a Commission-wide amendment to the statutory definition.[2][4]

The basis for the request also clarifies what the agency did not approve. Nodal represented that state-regulated trust companies can be subject to extensive supervision, giving examples under New York law. It also noted that such companies have become important in the custody of digital assets and suggested an easier path for collateral workflows involving them. Those were the applicant's arguments. The relief itself concerns daily settlements and the settlement-bank oversight obligations. It does not expressly approve any named token, stablecoin, blockchain wallet, collateral haircut, segregation structure or digital-asset clearing product. Those arrangements may require additional regulatory, credit, legal and operational analysis.[2][4]

The relevant legal entity would be the DCO operating the settlement arrangement, not a retail broker merely offering a trading account over that infrastructure. Customer-facing brokers and futures commission merchants can be important participants in clearing-member relationships, but the November assurance speaks to the DCO's choice and monitoring of a settlement service provider. It cannot be read as a retail brokerage licence for the trust company, nor as a dispensation from capital, liquidity or customer-asset protections. A banking charter, trust-company charter and futures intermediary registration are distinct authorisations.[2][4]

One is a named foreign collateral exception; the other a general settlement test

A side-by-side comparison identifies at least six material differences. Letter 26-26 was issued to address a specified Eurex/CBL custody configuration. Letter 26-30 responded to Nodal but states an assurance applicable to any compliant DCO. The former addresses customer-owned securities securing cleared swaps; the latter addresses daily settlement payments between a DCO and clearing members. The September text contains an eligible-issuer-country restriction and an annual custody-chain due-diligence test; the November text imports the established settlement-bank supervision requirements. The September arrangement includes mandatory prospective customer disclosures and CBL acknowledgements; the November letter does not substitute for the underlying customer-money rules, whether or not such documents are separately required. And the September position involved both the Division of Clearing and Risk and the Market Participants Division, while November's was issued by the Division of Clearing and Risk.[1][2][4]

Those distinctions are not merely legal drafting. They identify different failure pathways. A geographically extended custody chain can be exposed to securities-law, ownership, account-control, sub-custodian and bankruptcy-timing questions. Daily settlement using a trust company raises the capacity and resilience of the payment mechanism, the DCO's exposure to that institution, the timing and finality of transfers, and the risk that a settlement provider fails to perform. A sophisticated clearing operation may confront both, but solving one does not resolve the other. The first involves where specified customer securities can be held; the second involves who can conduct a specified daily financial process.[1][2][4]

There is also an important limit on numerical comparison. The letters contain no measure of how much new customer margin will move through Clearstream, how many clearing members will choose trust-company settlement, or the financial benefit to either applicant. The September letter's six jurisdictions, $1 billion qualifying-bank threshold and fourteen-day disqualification clock are rule conditions, not an estimate of deposited balances or customer claims. The November letter has no equivalent public tally of assets or users. Producing a trillion-dollar industry exposure figure from these documents alone would be a fabrication. The correct investigative contribution is a verified perimeter map, not an invented market-size calculation.[1][2][4]

What an intermediary must verify before relying on either route

For a futures commission merchant considering the Eurex proposal, the first diligence question is whether the customer's product and securities fit the letter. The second is whether the custodian chain remains within the specified regulatory tests, supported by the required acknowledgements and customer disclosures. The third is whether the broker can operationally retrieve or move assets if an institution loses its qualifying status. The resulting questions extend to the insolvency treatment of each relevant securities account, the effect of sub-custodian arrangements, the treatment of non-US law in a US intermediary failure and any account-level segregation records maintained along the chain. Those are questions for diligence, not conclusions that the arrangement lacks adequate protection.[1]

For a clearing organisation using the Nodal route, the questions shift. What legal form and supervisory regime does the proposed trust company operate under? How does the DCO evaluate its financial capacity, settlement-service reliability and operational controls as though it were a settlement bank? Can the DCO still meet its participant-payment schedule under disruption? What arrangements guarantee or document settlement finality? Does the trust company's actual service agreement address a bank-like obligation, or only custody of digital assets? The text of Letter 26-30 allows a compliance route but is not a certificate endorsing any particular provider.[2][4]

Both letters expressly preserve the limitations of staff no-action policy. They are not binding on the Commission, do not resolve every provision of the Commodity Exchange Act or CFTC regulations, and can depend on representations that prove materially different in practice. Staff may revise, suspend, condition or withdraw a position. Neither document states that a customer has already lost funds or that a clearing house has breached a rule. Neither proves new business was won, client money was transferred, or a digital-asset product launched. To make those claims would require actual clearing-member notices, revised rulebooks, public collateral policies, arrangements with settlement institutions and customer disclosures.[2][4]

The central finding from comparing the primary records is that regulatory flexibility came through two different channels: a high-condition, named cross-border securities-custody exception and a more generally worded, function-specific daily-settlement assurance. A useful next reporting step is to ask Eurex Clearing, Clearstream Banking and Nodal Clear which operational changes have actually occurred, and request their explanation of the relevant safeguards. The CFTC should be asked whether it expects to revise Regulation 39.14's definition or to address custody jurisdiction in a broader rulemaking. None of those inquiries was sent in preparing this documentary analysis, and none of the named parties is accused here of wrongdoing. The question worthy of continued investigation is not whether a new type of institution can appear in a diagram, but what the permission actually covers, how it is tested and what happens when the conditions cease to hold.[1][2][4]

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