CFTC Staff Addresses Use of Trust Companies for Daily Settlements

The CFTC’s Division of Clearing and Risk issued a no-action letter allowing derivatives clearing organizations to use trust companies for daily settlements with clearing members, provided the trust company is treated like a settlement bank under CFTC requirements. The guidance, release 9322-26, removes uncertainty over whether trust companies qualify for the settlement role and gives DCOs a narrower compliance path. It matters because clearer settlement arrangements can reduce operational and legal risk for clearing members and DCOs. Market participants will watch whether DCOs revise settlement-bank agreements and whether the CFTC formalizes the approach in future rulemaking.