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Notice I-04-17

September 17, 2004

CFTC Changes Financial Filing and Notice Requirements for Independent IBs Effective September 30, 2004

The Commodity Futures Trading Commission (CFTC) has amended its regulations relating to minimum financial and reporting requirements, and several of these amendments affect independent IBs. The amendments become effective September 30, 2004.

Financial Reporting Requirements

The CFTC adopted several changes to its financial reporting requirements. First, the amendments eliminate the requirement that IBs file their unaudited Form 1-FR-IBs or FOCUS Reports and their annual certified financial statements with the CFTC. IBs will only be required to file those statements with NFA.

Second, the amendments authorize NFA to grant requests to change an IB's fiscal year and requests to extend the time to file unaudited Form 1-FR-IBs and annual certified statements. Most IBs should direct these requests to NFA. If the IB is a broker-dealer, however, it may send the request to its designated examining authority with a copy to NFA, and it must promptly provide NFA with a copy of the DEA's response granting or denying the request.

Third, the CFTC amended Regulation 1.10(d)(4) to clarify who can attest to the accuracy of Form 1-FR-IB. The amendment addresses different organizational structures and includes limited liability companies and limited liability partnerships.

Notice Requirements

The CFTC shortened the time periods for firms to notify the CFTC and NFA of certain events.

  • The firm must file notice that it has failed to maintain current books and records on the day the failure occurs. While the initial notice requirement has not changed, the firm now has only 48 hours to file the written report describing the actions the firm has taken or will take to correct the problem.

  • The firm must file notice of material inadequacies in its books and records within 24 hours after it discovers or is notified of the material inadequacy. The firm has 48 hours to file the written report describing the actions the firm has taken or will take to correct the problem.

Questions concerning these requirements should be directed to Sharon Pendleton, Associate Director, Compliance, at spendleton@nfa.futures.org or (312) 658-6540 or Tracey Hunt, Team Manager, at thunt@nfa.futures.org or (312) 658-6835.

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