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August 24, 2012
NFA Financial Requirements Section 16 - Required Notification of Certain Disbursements from Segregated/Secured Amount Funds and New Requirements Regarding Statement Submitters
Notification of Certain Disbursements from Segregated or Secured Amount Funds
Effective September 1, 2012, any FCM that makes a disbursement or a series of disbursements from its customer segregated funds account(s) or its foreign futures and foreign options customer secured amount funds account(s) that are not for the benefit of customers and that exceed 25% of the FCM's residual interest in either of those funds account(s) based upon the firm's most current daily segregated funds or secured amount funds calculation must comply with the following additional requirements imposed under NFA Financial Requirements Section 16.
The FCM is prohibited from making such a disbursement or series of disbursements unless the FCM's CEO, CFO, or a listed principal of the firm who holds a position with knowledge of the FCM's financial requirements and position (Financial Principal), pre-approves in writing the disbursement that singularly or as part of a series of disbursements puts the total disbursements above the 25% threshold; and
Immediately after the FCM's CEO, CFO or Financial Principal pre-approves the disbursement, the FCM must file a written notice signed by the CEO, CFO or Financial Principal through the WinjammerTM system that includes the information set forth in Financial Requirements Section 16(b)(ii)(1)-(4) for disbursements from segregated funds accounts and the information in Financial Requirements Section 16(c)(ii)(1)-(4) for customer secured amount funds accounts.
In order to file this required written notice through the WinjammerTM system, the FCM must create a "Regulation Notice" in the filing index section of WinjammerTM as of the date of the approval and then select the appropriate notice to file (Disbursement of Segregated Funds; Disbursement of Secured Amount Funds or for CME Members Disbursement of Sequestered Funds). After selecting the appropriate notice, the FCM must upload a PDF of the written notice.
New Requirements Regarding Statement Submitters
Also effective September 1, 2012, the following reports required under NFA Financial Requirements Section 16 - an FCM's monthly financial and operational information, semi-monthly Segregated Investment Detail Reports and daily segregated funds and secured amount funds calculation(s) - must be submitted through WinjammerTM by the FCM's CEO, CFO or other individual designated by the CEO or CFO to file on his or her behalf (and where applicable a person described in CFTC Regulation 1.10(d)(4)(ii))1. An FCM's CEO and CFO currently have authorization to file these required reports through WinjammerTM. In order to add an individual designated by the CEO or CFO to submit the required statements, the FCM's Security Manager must first add the individual as a "Firm User" via the "Firm Maintenance" section in the WinjammerTM system. Once added, that designated individual must log into WinjammerTM and access the "Request to Submit Statements" section. The individual must then download the User Identification Request Agreement and have it completed and signed by the CEO or CFO and submit a PDF of the completed Agreement through WinjammerTM. Once the Agreement is submitted, the FCM's DSRO must approve the designee before that person can begin submitting these statements through WinjammerTM.
The purpose of this Notice is to provide Members with important information on completing the filings required under NFA Financial Requirements Section 16. NFA Financial Requirements Section 16 imposes other important requirements on FCMs with respect to customer segregated and customer secured amount funds that were summarized in a Notice to Members issued on July 18, 2012.
If you have any questions on the technical aspects of making the required filings, please contact Valerie O'Malley, Senior Manager - Compliance (email@example.com or 312-781-1290) or Brian Rothfuss, Manager - Compliance (firstname.lastname@example.org or 312-781-1439). Other questions on Section 16's requirements should be directed to Valerie O'Malley or Carol Wooding, Associate General Counsel (email@example.com or 312-781-1409).
1 CFTC Form 1-FR and SEC FOCUS Reports must be filed by an authorized person under CFTC Regulation 1.10(d).