FCM Applicants

Firms applying as a FCM have a financial filing requirement (either a Form 1-FR-FCM or a FOCUS report), which can be met in one of the following ways:  

• A financial statement certified by an independent public accountant as of a date not more than 45 days prior to the date on which such report is filed; or
• A financial statement as of a date not more than 17 business days prior to the date on which such report is filed and a financial statement certified by an independent public accountant as of a date not more than one year prior to the date on which such report is filed.

NFA would expect an applicant FCM's adjusted net capital to be above the early warning requirement. Applicants who cannot meet the early warning requirement are subject to additional reporting obligations until they have sufficient capital.

A firm's registration as an NFA Member FCM will not be complete until the FCM designates an individual as a Chief Compliance Officer (CCO) and lists the CCO as a principal of the FCM.

An FCM may also need to provide compliance procedures, additional documentation and written representation to NFA for review as part of the application. Such procedures, documents and representation would generally include, but are not limited to:  

• Anti-Money Laundering Procedures
• Interpretive Notice NFA Compliance Rule 2-9: FCM and IB Anti-Money Laundering Program;
• AML Procedures System
• NFA's Anti-Money Laundering Questionnaire;
• Business Continuity and Disaster Recovery Procedures
• Interpretive Notice NFA Compliance Rule 2-38: Business Continuity and Disaster Recovery Plan;
• NFA's Business Continuity Questionnaire;
• Electronic Order Routing Systems Procedures;
• Promotional Material Procedures
• Interpretive Notice NFA Compliance Rule 2-29: Communications With the Public and Promotional Material;
• Interpretive Notice NFA Compliance Rule 2-29: Review of Promotional Material Prior to its First Use;
• Interpretive Notice NFA Compliance Rule 2-9: Enhanced Supervisory Requirements;
• Interpretive Notice NFA Compliance Rule 2-29: Use of Promotional Material Containing Hypothetical Performance Results;
• Interpretive Notice NFA Compliance Rule 2-9: Supervisory Procedures For Email and the Use of Web Sites;
• Interpretive Notice NFA Compliance Rules 2-29 and 2-9: NFA's Review and Approval of Certain Radio and Television Advertisements;
• Supervision of Associated Persons Procedures;
• Customer Complaint Procedures;
• Margins/Segregation Procedures (if applicable);
• Source of Assets Letter, describing the source of the firm's current assets (including the names of any individuals and/or entities that have contributed capital to the firm and the amount of capital contributed by each individual and/or entity) and represents that the capital has been contributed for the purpose of operating the business and will continue to be used for such purpose as required by CFTC Regulation 1.10. The Source of Assets Letter should be signed by a Principal of the firm and on firm letterhead;
• For securities broker/dealers, a copy of the most recent report from the securities DSRO and the firm's response;
• Copies of Subordinated Loan Agreements (if applicable);
• FCMs must file all unaudited financial statements electronically through WinJammer^TM;
• For requirements regarding supervising the use of an electronic trading platform, please refer to NFA's Interpretive Notice to Compliance Rule 2-36(e).

As NFA is conducting a review of the firm's financial operations, NFA will often request additional items not listed above, such as bank statements, general ledger, and cancelled checks. An FCM will not be approved until NFA reviews and approves all requested items. Any of these financial or procedural items can be submitted to NFA via email at Applicants@nfa.futures.org.