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What is an Opt-out Customer? A Comprehensive Legal Overview
Definition & Meaning
An opt-out customer is a type of customer who qualifies as an eligible contract participant, as defined by the Commodity Exchange Act. This customer has chosen not to have their funds, which are used for trading through a registered derivatives transaction execution facility, kept separate or segregated by the futures commission merchant. This election allows the customer to manage their funds differently, specifically concerning agreements or transactions governed by the rules of the derivatives facility. It is important to note that this designation applies only to specific agreements and not to the customer's status in other contexts under the Act.
Table of content
Legal Use & context
The term "opt-out customer" is primarily used in the context of financial regulations and trading practices. It is relevant in areas such as commodities trading and securities exchanges. Customers who opt-out may find this designation useful when engaging with futures commission merchants and derivatives transaction execution facilities. Users can manage related forms and agreements through platforms like US Legal Forms, which provide templates drafted by legal professionals.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A trader who qualifies as an eligible contract participant decides to trade futures contracts without having their margin funds segregated. By opting out, they can utilize their funds more flexibly within the trading facility.
Example 2: A business that frequently engages in high-volume trading may choose to be an opt-out customer to streamline their transactions and reduce administrative burdens (hypothetical example).
Relevant laws & statutes
Key regulations include:
Commodity Exchange Act
17 CFR 1.3 - Definitions related to commodity and securities exchanges
A person or entity that meets specific financial criteria to engage in certain transactions.
All opt-out customers are eligible contract participants, but not all eligible contract participants opt out.
Segregated Customer
A customer whose funds are kept separate for trading purposes.
Opt-out customers choose not to have their funds segregated.
Common misunderstandings
What to do if this term applies to you
If you believe you qualify as an opt-out customer, consider reviewing your trading agreements and the implications of your choice. It may be beneficial to consult with a financial advisor or legal professional to understand your options fully. Additionally, you can explore US Legal Forms for templates that can help you manage your agreements effectively.
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