Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 17f-6 -- Custody of Investment Company Assets with Futures Commission Merchants and Commodity Clearing Organizations

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1. A fund may place and maintain cash, securities, and similar investments with a Futures Commission Merchant in amounts necessary to effect the Fund's transactions in Exchange-Traded Futures Contracts and Commodity Options, Provided that:
   
   
   1. The manner in which the Futures Commission Merchant maintains the fund's assets shall be governed by a written contract, which provides that:
      
      
      1. The Futures Commission Merchant shall comply with the segregation requirements of section 4d(2) of the Commodity Exchange Act and the rules thereunder or, if applicable, the secured amount requirements of rule 30.7 under the Commodity Exchange Act;
         
         
      2. The Futures Commission Merchant, as appropriate to the Fund's transactions and in accordance with the Commodity Exchange Act and the rules and regulations thereunder, may place and maintain the Fund's assets to effect the Fund's transactions with another Futures Commission Merchant, a Clearing Organization, a U.S. or Foreign Bank, or a member of a foreign board of trade, and shall obtain an acknowledgment, as required under rules 1.20(a) or 30.7(c) under the Commodity Exchange Act, as applicable, that such assets are held on behalf of the Futures Commission Merchant's customers in accordance with the provisions of the Commodity Exchange Act; and
         
         
      3. The Futures Commission Merchant shall promptly furnish copies of or extracts from the Futures Commission Merchant's records or such other information pertaining to the Fund's assets as the Commission through its employees or agents may request.
         
         
   2. Any gains on the Fund's transactions, other than de minimis amounts, may be maintained with the Futures Commission Merchant only until the next business day following receipt.
      
      
   3. If the custodial arrangement no longer meets the requirements of this section, the Fund shall withdraw its assets from the Futures Commission Merchant as soon as reasonably practicable.
      
      
2. For the purposes of this section:
   
   
   1. Clearing Organization means a clearing organization as defined in rule 1.3(d) under the Commodity Exchange Act and includes a clearing organization for a foreign board of trade.
      
      
   2. Exchange-Traded Futures Contracts and Commodity Options means commodity futures contracts, options on commodity futures contracts, and options on physical commodities traded on or subject to the rules of:
      
      
      1. Any contract market designated for trading such transactions under the Commodity Exchange Act and the rules thereunder; or
         
         
      2. Any board of trade or exchange outside the United States, as contemplated in Part 30 under the Commodity Exchange Act.
         
         
   3. Fund means an investment company registered under the Act.
      
      
   4. Futures Commission Merchant means any person that is registered as a futures commission merchant under the Commodity Exchange Act and that is not an affiliated of the Fund or an affiliated person of such person.
      
      
   5. U.S. or Foreign Bank means a bank, as defined in section 2(a)(5) of the Act, or a banking institution or trust company that is incorporated or organized under the laws of a country other than the United States and that is regulated as such by the country's government or a agency thereof.

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