CFTC Segregation Election Letter
IMPORTANT: ACTION REQUIRED
NOTIFICATION OF RIGHT TO SEGREGATION OF INITIAL MARGIN POSTED IN RESPECT OF UNCLEARED SWAPS PURSUANT TO CFTC RULE 23.701*
Dear Sir or Madam:
This notification (the “CFTC IM Segregation Right Notice”) is being provided by Deutsche Bank Aktiengesellschaft (the “swap dealer” or “Deutsche Bank AG”) pursuant to the Commodity Futures Trading Commission (the “CFTC”) Rule 23.701 in respect of one or more swap counterparties (each, a “Counterparty”).
Please note that failure to make the necessary election described below may inhibit our ability to execute swaps (as defined by CFTC rules) that are not submitted for clearing (each, an “Uncleared Swap”) with Counterparty due to CFTC rules.
A failure to respond to this notice within five (5) business days of receipt of this notice will be deemed to be a confirmation of an election “not to require” IM Segregation in accordance with the CFTC Segregation Regime.
In accordance with CFTC Rule 23.701, we¹ are hereby notifying you that, to the extent Counterparty posts Initial Margin (as defined in CFTC rule 23.700) (the “IM”) in respect of any Uncleared Swap between us and Counterparty, Counterparty has the right to elect that IM be segregated (“IM Segregation”) in accordance with the requirements set forth in CFTC Rules 23.702 and 23.703 (the “CFTC Segregation Regime”).
We need to obtain the following information as soon as possible in order to satisfy our obligations under CFTC rules:
I. Counterparty’s election to either:
- require IM Segregation in accordance with the CFTC Segregation Regime
Note: If Counterparty chooses this first election, certain documentation, including a tri-party custodial agreement that meets the requirements of the CFTC Segregation Regime, must be put in place. Furthermore, choosing this election may prevent us from entering into new Uncleared Swaps with Counterparty until such documentation is in place;² or
- not require IM Segregation in accordance with the CFTC Segregation Regime
Note: If Counterparty chooses this second election, Counterparty is free to make or retain other arrangements for IM Segregation. This election will not impact Counterparty’s existing segregation arrangements or negotiations, if any.
Please complete the CFTC IM Segregation Election Letter attached to this notice as Exhibit A and deliver it to us as soon as possible.
For the avoidance of doubt, Counterparty’s election to require or not to require IM Segregation in accordance with the CFTC Segregation Regime will apply solely with respect to any Uncleared Swap that is entered into after delivery of such election letter to us at the address specified in Exhibit A (or via ISDA Amend). The election made by Counterparty may be changed at any time by delivery of written notice to us at the same address (or via ISDA Amend). Any such changed election will supersede any prior election with respect to any Uncleared Swap that is entered into after delivery of such changed election.
If you have any questions regarding this notice, please contact df.segia@db.com.
Deutsche Bank
Exhibit A:
Capitalized terms used in this letter have the meanings specified in the CFTC IM Segregation Right Notice referenced below unless otherwise defined.
I. Initial Margin Segregation Election.
Counterparty³ makes the following election with respect to IM posted on behalf of Counterparty in connection with any Uncleared Swap between Swap Dealer and Counterparty that is executed by the entity executing this election letter after delivery of this election letter to Swap Dealer: (check one)
- Counterparty hereby elects to require IM Segregation in accordance with the CFTC Segregation Regime.
Note: If Counterparty chooses this first election, certain documentation, including a tri-party custodial agreement that meets the requirements of the CFTC Segregation Regime, must be put in place. Furthermore, choosing this election may prevent Swap Dealer from entering into Uncleared Swaps with Counterparty until such documentation is in place.
- Counterparty hereby elects not to require IM Segregation in accordance with the CFTC Segregation Regime.
Note: If Counterparty chooses this second election, Counterparty is free to make or retain other arrangements for IM Segregation. This election will not impact Counterparty’s existing segregation arrangements or negotiations, if any.
CFTC IM SEGREGATION ELECTION LETTER
By executing and delivering this election letter, the signatory represents that it has all necessary authority to provide the election above on behalf of Counterparty.
[Legal Name of Entity Completing Letter]⁴
[Counterparty LEI:]⁵
By: _________________________________
Name:
Title:
* Modified from the CFTC IM Segregation Right Notice, © 2014 International Swaps and Derivatives Association, Inc., which has neither reviewed nor endorsed the modifications.
¹ References in this notice to “our”, “us”, or “we” are references to Deutsche Bank AG
² Please note that any existing custodial arrangements, whether legally required or bargained for independently, may not contain certain terms required to be included under the CFTC Segregation Regime and therefore may need to be revised if IM Segregation in accordance with the CFTC Segregation Regime is elected. Parties wishing to elect IM Segregation in accordance with CFTC Segregation Regime may wish to consult with legal counsel as to the potential impact on trading in Uncleared Swaps with us and whether an election to not require IM Segregation in accordance with CFTC Segregation Regime is preferable until such time as a mutually acceptable tri-party custodial arrangement is executed. As further described in this notice, Counterparty may exercise its right to change its election at any time.
³ “Counterparty” means each account, client, fund, investor, and/or other principal on behalf of whom this CFTC IM Segregation Election Letter is executed.
Deutsche Bank
⁴ The relevant election in this letter will only apply to Uncleared Swaps that are executed by the relevant party that executes this letter. For instance, if this letter is being executed by any agent, then the relevant election will only apply to Uncleared Swaps that are executed by such agent on behalf of Counterparty.
Moreover, if this letter is being executed by an agent on behalf of one or more Counterparties, the agent should insert before the signature: “as agent for [insert name of account, client, fund, investor and/or other principal] OR [the accounts, clients, funds, investors and/or other principals named on the attached sheet]”. If the agent is acting on behalf of more than one Counterparty, it may list the names of such Counterparties on a separate sheet attached to this letter, in which case this letter will be treated as if it were a separate letter with respect to each Counterparty listed on such sheet.
⁵ If this letter is being executed by an agent on behalf of more than one Counterparty, the agent should include an LEI for each such Counterparty.