Amendments to Regulation 1.25 — Permissible Investments of Customer Funds by Futures Commission Merchants and Derivatives Clearing Organizations
Commodity Futures Trading Commission (CFTC)
Research Complete
Hallucination findings published
AI Labs white paper available
Rich-narrative analysis of how AI models fail on this regulation, written for
AI model providers. Includes per-finding context and remediation framing.
Both Claude Opus 4.7 with web search and Claude Sonnet 4.6 with web search failed on the same question type — a size-tiered concentration limit embedded in the 2024 CFTC Amendments to Regulation 1.25 — producing flat uniform-threshold answers where the rule specifies a...
Read white paper →
Hallucination Shape
(5 Response Hallucination + 25 Citation Hallucination = 30 Hallucination findings)
Citation Hallucination Modes (25 failures)
Fabricated
0
Pretextual
0
Contradictory
25
Hallucination findings
5 finding cards across
2 AI Models —
covering 5 Response Hallucinations +
25 Citation Hallucinations
(30 hallucination failures total).
Each card pairs the AI's answer against the authenticated regulator-text excerpt that contradicts it, and flags every AI-cited source as Fabricated / Pretextual / Contradictory.
What are the updated concentration limits that apply to government money market funds and Treasury ETFs under the 2024 Regulation 1.25 amendments, including any tiered or size-based thresholds based on fund and management company asset sizes?
Claude Opus 4.7 (web search on) answered
the final rule did not adopt tiered or FCM-size-based thresholds — the percentage limits apply uniformly regardless of FCM size
Regulator text says
Investments in government money market funds or qualified ETFs whose assets are ≥$1B and whose management company manages ≥$25B: may not exceed 50% of total segregated assets.
Under the 2024 Regulation 1.25 amendments, what dollar-weighted average maturity standard applies to the overall portfolio of customer segregated funds, and which investment types are excluded from that calculation?
Claude Opus 4.7 (web search on) answered
the dollar-weighted average time-to-maturity of the portfolio of US government securities held in segregation is limited to 24 months, computed in a manner consistent with SEC Rule 2a-7's WAM methodology
Regulator text says
The dollar-weighted average of the time-to-maturity of the portfolio may not exceed 24 months. This limit excludes government money market funds, Treasury ETFs, and foreign sovereign debt from the calculation.
What are the key compliance dates under the 2024 Regulation 1.25 amendments — specifically the general effective date for conforming investment policies and the separate deadline for updating Segregation Investment Detail Reports and customer risk disclosure statements?
Claude Opus 4.7 (web search on) answered
the rule sets the SIDR-revision compliance date at a separate, later date (commonly described as roughly six months to a year after the effective date)
Regulator text says
SIDR Report and Risk Disclosure Statement updates: compliance date March 31 2025.
What process did the CFTC use to approve the 2024 Regulation 1.25 amendments, and were any dissenting or concurring commissioner views recorded alongside the final rule?
Claude Opus 4.7 (web search on) answered
The rule was approved at the December 3, 2024 open Commission meeting (Chairman Behnam presiding) and a voting copy was issued on December 6, 2024.
Regulator text says
Rule approved via seriatim process on December 3 2024 — no public open meeting, individual vote records not published in any accessible source reviewed.
A Chief Risk Officer preparing an FCM investment policy statement asked for the updated concentration limits applying to government money market funds and Treasury ETFs under the 2024 Regulation 1.25 amendments, including any size-based or tiered thresholds.
Claude Sonnet 4.6 (web search on) answered
there is no size-based tier that changes the percentages based on the FCM's total assets — the limits apply uniformly: Tier 1 — Per Instrument: No more than 10% of total assets held in customer segregation may be invested in any single government money market fund
Regulator text says
Investments in government money market funds or qualified ETFs whose assets are ≥$1B and whose management company manages ≥$25B: may not exceed 50% of total segregated assets.
Affected audiences
These findings affect the following audiences. Click through for the case studies that aggregate findings across all regulations in this jurisdiction.
Practitioners
Sectors × Departments