For the past several years, I have served a s Special Advisor to the IB Advisory Committee of the NFA. At last week’s meeting, NFA staff presented several proposals in response to the MF Global collapse. These proposals would enable the NFA to work more closely with other SROs to recognize warning signs of imminent FCM failing(s).
These proposals also include means by which professionals and the trading public can access information about their FCM more easily and in a more transparent form. Here is a short summary. The IB Advisory Committee viewed these ideas as favorable. Some will begin to take affect as soon as late spring; others require further approval and cooperation among regulatory entities.
- Requiring all FCMs to file daily seg reports. This report is already required at the NFA; now this will be required at all SROs. (According to reports, MFG was on daily reporting to its DSRO for some time prior to its failure.)
- Requiring all FCMs to file twice monthly Seg Investment Detail Reports (SIDR). NFA currently requires this report monthly. The reports reflect how customer seg funds are invested and where those funds are held.
- Performing more periodic spot checks to monitor compliance with seg requirements. The information will be shared among SROs, not just the FCM’s DSRO.
- Requiring an FCM’s CFO or CEO to approve any disbursement of customer seg funds that is not made for the benefit of customers and that exceed 25% of excess seg funds. This type of disbursement will trigger an immediate notification to the DSRO. (Sometimes referred to as the ‘Corzine Rule’ this requirement works in tandem with the daily seg reporting already in place. It is calculated from noon to noon.)
Much of this information will be made available either monthly or bi-monthly on the 15th and last day of the month.
Dodd-Frank proposals and rules are still working their way through the CFTC. A review will be presented during our member meeting April 18th at the NYMEX Building in New York. The CFTC is up for reauthorization by Congress next year.
Congratulations to Paul Georgy, Allendale, Inc. on being elected Vice-Chairman of the NFA Board of Directors. Allendale, Inc. is a GIB located in McHenry, IL and Paul is a past-President of the NIBA.
Regulation is one of the important topics we’ll cover at the April 18th meeting. Members and Compliance officers of all firms are invited to attend complimentary, as a benefit of membership. Early registration ends April 11th. After April 11th, all attendees will be charged a $25 late registration fee.
See you in New York.
Warm regards,
Melinda
Melinda Schramm, Chairman
