On July 13, the Commodity Futures Trading Commission approved National Futures Association (NFA) rules and a related interpretive notice that create new requirements for futures commission merchants (FCMs) with respect to customer segregated funds and secured amount accounts.
The new NFA rules require FCMs to maintain written policies and procedures regarding the FCM’s residual interest in customer segregated fund and customer secured amount accounts. The policies and procedures must identify a target amount for an FCM’s residual interest. The target amount is to be established after a due diligence inquiry considering several specified factors. The rules additionally prohibit an FCM from withdrawing, transferring or otherwise disbursing funds from customer segregated or secured amount accounts in amount that exceeds 25% of the FCM’s residual interest unless the firm’s CEO, CFO or other financial principal who fulfills certain requirements pre-approves the withdrawal or series of withdrawals that exceed the 25% threshold. If an FCM withdraws more than 25% of its residual interest it must electronically file a written notice immediately after the CEO, CFO or financial principal approves the disbursement. These requirements do not apply to disbursements to customers.
The rules also require FCMs to report their adjusted net capital, minimum net capital and excess capital, whether customer segregated funds or secured amounts are deposited with an affiliate, and the firm’s leverage ratio to NFA on a monthly basis. The monthly reports are due seventeen business days after the end of the month, beginning with September 2012, with the first such report being due October 23.
More information is available here.