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October 01, 2012
NFA Financial Requirements Section 16 Reporting Requirements Guidance
NFA Financial Requirements Section 16, which became effective on September 1, 2012, requires FCMs to submit certain financial related information to NFA on a monthly, semi-monthly or daily basis. All of the required information has a specific due date, and FCMs are reminded that any information filed after its due date must be accompanied by a fee of $1,000 for each business day that it is late.
Most of the required information will be obtained from other regular filings made by the FCM. The capital information required under Financial Requirements Section 16(d)(i)(1) will be extracted from the firm's monthly 1-FR or FOCUS filing and customer segregated and customer secured amount information required under Financial Requirements Section 16(d)(ii) will be obtained from the semi-monthly SIDR filings. However, Financial Requirements Section 16 also requires FCMs that hold customer segregated and secured amount funds to report other information, some of which is not included in the firm's regular monthly or semi-monthly filings. The purpose of this notice is to provide instructions on how to file this additional information.
Financial Requirements Section 16(d)(i)(2) requires FCMs that hold customer segregated and secured amount funds to indicate monthly whether any depository used during the previous month to hold customer segregated or secured amount funds is an affiliate of the FCM and Section 16(d)(i)(3) requires those FCMs to report the firm's measure of leverage (as defined in the subsection). Beginning with the monthly 1-FR or FOCUS report for the month ended September 30, 2012, which must be filed by October 23, 2012, FCMs that hold customer segregated or customer secured amount funds will be required to provide this information in the 'Supplementary Information' (1-FR filers) or 'Exchange Supplementary' (FOCUS filers) section of the 1-FR or FOCUS statement.
NFA will obtain the information required to calculate the FCM's measure of leverage through the supplemental schedule. Most of the leverage schedule information required will be extracted from the FCM's monthly 1-FR or FOCUS filing and will automatically be included in this schedule. However, the FCM will be required to provide balances for information that is not specifically itemized in the FCM's 1-FR or FOCUS filing.
The information that will be extracted from the 1-FR or FOCUS is:
The supplemental schedule also requires FCMs to respond to the following information requests with respect to depositories used to hold customer segregated or customer secured funds during the previous month:
During the month did the firm maintain customer segregated funds at a depository which is an affiliate? (Yes/No)
During the month did the firm maintain separate 30.7 funds at a depository which is an affiliate? (Yes/No)
For purposes of these questions, affiliate is defined as another entity that is related to the FCM in some way through common ownership such as the entity owns the FCM (parent company), is owned by the FCM (subsidiary company) or shares common ownership with the FCM (sister company).
Residual Interest Targets
NFA Financial Requirements Section 16 also requires an FCM to maintain written policies and procedures regarding the maintenance of the FCM's residual interest in its customer segregated funds accounts and its customer secured fund accounts. NFA is requiring FCMs to report the target residual amount for customer segregated and customer secured amount funds on the monthly supplemental schedule as of the month ending September 30, 2012. FCMs will be required to choose one of the following options to report residual interest targets for customer segregated and customer secured amount funds (if applicable):
NFA intends to modify the daily segregation and secured amount statements in the very near future to require FCMs to update its target residual amount to reflect any changes that occur during the month. NFA will notify FCMs prior to the effective date of this requirement.
If you have any questions on these reporting methods, please contact Todd Maines, Manager, Compliance (firstname.lastname@example.org or 312-781-1560) or Valerie O'Malley, Senior Manager, Compliance (email@example.com or 312-781-1290).