Filing Requirements
Forex Dealer Members (FDM) have the following filing requirements:
Required Accounting Records
Each FDM is required to maintain an accounting system that records all of the firm's financial activity. The financial reports created from the accounting system must be prepared following U.S generally accepted accounting principles (GAAP), be done on an accrual basis, and be kept current. Note: some of these requirements are more restrictive than GAAP with respect to the classification of current and non-current assets. NFA Financial Requirements and CFTC Regulation 5.7 include definitions that a Member should fully understand in order to properly prepare its financial reports.
View the 1-FR Instruction Guide for a detailed explanation of these requirements
View the 1-FR Instruction Guide for FDMsAdjusted Net Capital
Each FDM is required to maintain adjusted net capital greater than the minimum net capital requirement for that FDM at all times. Adjusted net capital is computed as follows:
Current Assets - Liabilities - Charges against Capital = Adjusted Net Capital.
When computing adjusted net capital, a firm may exclude a liability that is subordinated to the claims of all general creditors pursuant to a satisfactory subordination agreement. A subordinated loan agreement (SLA) must be filed with NFA through WinJammerTM at least ten days prior to the proposed effective date of the agreement and cannot be considered satisfactory until NFA finds the agreement acceptable.
Net Capital Requirements
If an FDM Member's adjusted net capital falls below its minimum net capital requirements, as defined in NFA Financial Requirements Section 11, it must immediately notify the appropriate agencies of this deficiency.
FDMs also have an early warning capital level. In accordance with NFA Financial Requirements Section 2, if an FCM falls below the early warning level, it can be subject to additional reporting requirements and may be prohibited from guaranteeing IBs.
If adjusted net capital falls to a restrictive level, an FDM may not withdraw capital when it is below the equity withdrawal restriction nor may it pay down an SLA if it is below the suspended repayment restriction. FDMs must maintain equity capital of at least 30 percent at all times.
Filing of Financial Reports
FDMs must file financial reports with NFA and the CFTC on a periodic basis. See Reporting Requirements for FDMs for specifics on what must be filed, when and how. Financial reports filed late will be subject to late filing fees for each business day it is late. Under Bylaw 1303, failure to pay the late fee(s) within 30 days of the due date will be deemed by NFA as a request by the FDM to withdraw from NFA membership.
Risk Management Program
NFA Interpretive Notice 9069 requires each FDM that holds customer funds to establish, maintain and enforce a system of risk management policies and procedures designed to monitor and manage the risks associated with the FDM's activities. As a part of the Risk Management Program, each FDM is required to provide its senior management and its governing body with a quarterly Risk Exposure Report (RER), as well as interim RERs at any time the FDM detects a material change in the FDM's risk exposure. FDMs must electronically file through WinJammer™ a copy of the quarterly RER and any interim RERs within five business days of providing the report to its senior management.
Risk Assessment Report
As required by CFTC Regulation 5.11, each FDM must electronically file through WinJammer™ an annual Risk Assessment Report containing a copy of the firm's organizational chart, copies of the financial and operational policies, procedures and systems, and fiscal year-end consolidated financial statements for certain affiliates. Each FDM must also report any material change in the firm's organizational chart and/or financial and operational policies and procedures within 60 days after the end of the fiscal quarter where the change occurred.
CCO Annual Report
As required by NFA Compliance Rule 2.36 each FDM must designate a Chief Compliance Officer (CCO) and ensure that person is listed as a principal of the FDM. The CCO is required to prepare an annual report as outlined in CFTC Regulation 3.3(e) and provide the report to the firm's senior management or the board of directors. CFTC Regulation 3.3 requires that the report be furnished to the CFTC electronically, not more than 90 days after the FDM's fiscal year-end. The annual report must also include a certification by the firm's CCO or CEO regarding the accuracy and completeness of the report. FDMs should use WinJammer™ to submit the report.