Proposed Rule

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Proposed Amendments
(Additions are underscored and deletions are stricken through)

SCHEDULE D
FINANCIAL REPORTS

SECTION D1. CERTIFIED REPORT. Each Member FCM must annually file with its DSRO (See Section 2) a certified financial report, on Form 1-FR or other format acceptable to the FCM's DSRO, that speaks as of the close of the Member FCM's fiscal year and is prepared by an independent certified public accountant in accordance with CFTC Regulation 1.16. (The term "other format acceptable" is used so that certified FOCUS reports or certified financial statements, prepared in accordance with generally accepted accounting principles and accompanied by a reconciliation to the Form 1-FR, may be used to fulfill a Member FCM's filing requirements.)

D1-a. Due Date. Certified reports must be filed no later than 90 days after the close of the Member FCM's fiscal year, except in those cases where a Member FCM has applied to the DSRO and has received an approval for an extension or has received a notice from the DSRO that additional time is required to analyze the request, pursuant to D4-d below, in which case this provision does not apply.

D1-b. Required Statements. The Certified Report must contain the following statements:

    (i) Statement of Financial Condition;

    (ii) Statements of Cash Flows and Changes in Ownership Equity for the period between the date of the most recent certified statement of financial condition and the date for which the report is made;

    (iii) Statement of Computation of the Minimum Capital Requirements;

    (iv) Schedule of Segregated Funds Required for Commodity Futures and Options and Schedule of Segregated Funds on Deposit;

    (v) Schedule of Funds Required to be on Deposit and Funds Actually on Deposit in Separate Accounts;

    (vi) Statement of Income (Loss);

    (vii) Statement of Changes in Liabilities Subordinated to Claims of General Creditors for the period between the date of the most recent certified statement of financial condition and the date for which the report is made; and

    (viii) Attestation Letter.

SECTION D2. INTERIM REPORTS. Each Member FCM for which NFA is the DSRO shall file with NFA an interim financial report on Form 1-FR or other format acceptable on a quarterly basis. (The term "other format acceptable" is used so that FOCUS Reports may be used to fulfill a Member FCM's filing requirements.) For Member FCMs which use the FOCUS Report to fulfill their filing requirements, the interim report requirement is satisfied by the quarterly FOCUS Part II or IIA which under SEC requirements is filed based on the calendar quarter.

D2-a. Due Date. Interim reports must be filed no later than 17 business days after the date for which the report is made, except in those cases where a Member FCM has applied to its DSRO and has received an approval for an extension, or has received a notice from the DSRO that additional time is required to analyze the request, pursuant to D4-d(i) below, in which case this provision does not apply.

D2-b. Required Statements. The interim Financial Report must contain the following statements:

    (i) Statement of Financial Condition;

    (ii) Statement of Changes in Ownership Equity for the period between the date of the most recent statement of financial condition and the date for which the report is made;

    (iii) Statement of Computation of Minimum Capital Requirements;

    (iv) Schedule of Segregated Funds Required for Commodity Futures and Options and Schedule of Segregated Funds on Deposit;

    (v) Schedule of Funds Required to be on Deposit and Funds Actually on Deposit in Separate Accounts;

    (vi) Statement of Changes in Liabilities Subordinated to Claims of General Creditors for the period between the date of the most recent Statement of Financial Condition and the date for which the report is made; and

    (vii) Attestation Letter.

SECTION D3. OTHER REPORTS.

SECTION 8 D3-a. Additional Information Requests and Reports Submitted to Exchanges and Other Regulatory Agencies. If requested by NFA its DSRO, a Member FCM must promptly submit such additional reports and supplemental financial information which NFA the DSRO deems necessary.

D3-b. Position and Cash Information. Unless expressly exempted by its DSRO, each Member FCM must submit to the DSRO a report containing all open futures and commodity options positions carried by the Member FCM for Customer, Non-Customer and Proprietary Accounts. Additionally, for Proprietary Accounts and Non-Customer Accounts of parents and affiliates, the Member FCM must furnish upon special request a report containing all of the cash commodity positions of the parent or affiliate. These reports must be submitted on the DSRO's Supplementary Schedules or in another comparable format acceptable to the DSRO.

D3-c. Reports Submitted to Exchanges and Other Regulatory Agencies. Each Member FCM for which NFA is the DSRO and which also is a member of any securities or commodity exchange or other self-regulatory organization, or which is subject to financial reporting requirements of any federal agency, must promptly submit to NFA its DSRO, unless specifically exempted, copies of any and all financial reports and statements (e.g., FOCUS Reports) submitted pursuant to the requirements of those exchanges, organizations or agencies.

SECTION 9 D3-d. Notification of Reportable Positions.

Each Member FCM for which NFA is the DSRO and which is required to file any document with or give notice to the CFTC under CFTC Regulation 15.03 shall also file one copy of such document with or give such notice to NFA at its Chicago office no later than the date such document or notice is due to be filed with or given to the CFTC.

SECTION D4. MISCELLANEOUS PROVISIONS.

D4-a. Certification and Attestation Requirements.

    (i) For a Member FCM which is a registered partnership, financial reports must be signed by two general partners.

    (ii) For a Member FCM which is a corporation, financial reports must be signed by at least two of the bona fide, active executive officers of the corporation.

    (iii) For a Member FCM which is a sole proprietorship, financial reports must be signed by the proprietor.

    (iv) The signature of a partner of such partnership or an officer of such corporation may be waived by the DSRO, at its discretion. In the event of such waiver, an FCM will be required, in the case of a partnership, to have one general partner sign the financial reports. In the case of a corporation, the FCM will be required to have the chief executive officer or the chief financial officer sign the financial reports.

    (v) Financial reports audited by an independent public accountant must be attested to by the independent public accountant.

D4-b. Retention of Audit Report. A copy of each audit report signed by the Member FCM's independent public accountant must be retained as part of the books and records of the Member FCM.

D4-c. Election of Fiscal Year. A Member FCM must continue to use its current fiscal year, calendar or otherwise, unless a change in such fiscal year is approved upon written application to the DSRO.

D4-d. Extension of Time for Filing.

(i) Interim Financial Statements. In the event a Member FCM finds that it cannot file its report for any period within the time specified in D2-a above without substantial undue hardship, it may file with the DSRO an application for an extension of time to a specified date which may not be more than 90 days after the date as of which the financial statements were to have been filed. The application must state the reasons for the requested extension and must contain an agreement to file the report on or before the specified date. The application must be received by the DSRO before the time specified in D2-a above for filing the report. Within a reasonable time, not to exceed 10 calendar days after receipt of the application for an extension of time, the DSRO shall either notify the Member FCM of the grant or denial of the requested extension, or indicate to the Member FCM that additional time is required to analyze the request, in which case the amount of time needed will be specified.

(ii) Certified Financial Statements. For an extension of time to file a certified financial statement (See D1-a above), the Member FCM must apply to the DSRO. In no event will an extension of time exceed 90 days after the date the statement was originally due. The application must:

    (A) State the reason for the request;

    (B) Indicate that the inability to make a timely filing is due to circumstances beyond the control of the Member FCM, if such is the case, and describe briefly the nature of such circumstances;

    (C) Be accompanied by the latest available formal computation of Adjusted Net Capital under Section 1;

    (D) Include the most recent statement of segregation for commodity futures and/or commodity options where applicable;

    (E) Contain an agreement to file the report on or before the requested extension date;

    (F) Be received by the DSRO prior to the date the statement was originally due; and

    (G) Include a letter from the independent public accountant explaining:

      (1) The reason for the request;

      (2) The nature of any material inadequacies disclosed thus far in the audit work; and

      (3) The nature of any significant adverse financial or reporting findings which would cause a deficiency under Section 1.

    Within a reasonable time, not to exceed 10 calendar days after receipt of the application for an extension of time, the DSRO shall either notify the Member FCM of the grant or denial of the requested extension, or indicate to the Member FCM that additional time is required to analyze the request, in which case the amount of time needed will be specified.

[See Interpretive Notice at 9028.]

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