Guaranteed IB Requirements
Filing a Guarantee Agreement
An introducing broker (IB) may satisfy the minimum financial and reporting requirements by entering into a guarantee agreement with a registered futures commission merchant (FCM) that carries its customer accounts. The Form 1 FR-IB Part B is the only acceptable form for a guarantee agreement.
Terminating a Guarantee Agreement
Either party to a guarantee agreement can initiate a termination process by providing written notice of intent to the other party, NFA, the CFTC and the FCM's designated self-regulatory organization (DSRO), at least 30 days prior to the planned termination date. On the termination date, the IB must cease doing business until it files with NFA either:
- A new guarantee agreement; or
- Required financial reports to become an independent IB.
Switching from Guaranteed to Independent
IBs that switch from guaranteed to independent must file with NFA:
- A financial statement (either a Form 1-FR-IB or a FOCUS report) certified by an independent public accountant as of a date not more than 45 days prior to the date on which the report is filed; or
- A financial statement (either a Form 1-FR-IB or a FOCUS report) as of a date not more than 17 business days prior to the date on which such report is filed and a financial statement (either a Form 1-FR-IB or a FOCUS report) 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.
If a guaranteed IB's guaranteeing FCM's minimum required adjusted net capital falls below the prescribed early warning level for a specified period of time, the FCM may be forced to terminate its guarantee agreements.
Pursuant to Compliance Rule 2-23, an FCM that enters into a guarantee agreement is subject to discipline for violations of NFA rules by its guaranteed IB.