CFTC Staff Addresses Use of Trust Companies for Daily Settlements

The CFTC’s focus on the use of trust companies for daily settlements signals increased regulatory scrutiny on settlement mechanisms within derivatives markets. For middle-market credit professionals, this highlights potential shifts in operational risk management and compliance costs tied to settlement processes. Understanding evolving regulatory expectations around trust companies is crucial for structuring and monitoring credit facilities exposed to counterparties reliant on these settlement arrangements, as changes could impact liquidity and counterparty risk profiles in leveraged finance transactions.