As of September 1st, the NFA increased the financial reporting requirements for FCMs who hold customer funds pursuant to Section 16. In an effort to increase disclosure for the brokerage and investing community, the NFA’s Board of Directors decided in August to make those disclosures available on each FCM’s BASIC page. These reports should be available by November 1st. They will reflect information for each FCM as of September 30th. The NFA will be adding the three following reports for each FCM to their respective BASIC pages:
The Capital Report
This monthly report will be presented on a rolling 12 month basis, beginning with the initial September report. This report will include the firm’s adjusted net capital, their required net capital and their excess net capital for the most recent reporting period.
The Customer Segregated Funds Report
Although this is a semi-monthly report, like the Capital Report, it will be available on a rolling 12 month basis, beginning with the initial September report. This report will detail an FCM’s total for funds held in segregated accounts, the amount of funds required to be held in segregated accounts and any excess segregated funds. This report will also detail the percentage of segregated funds held in cash or other allowable investments (CFTC Regulation 1.25). Also, this report will detail any funds held on deposit with an affiliate of the FCM.
The Customer Secured Amount Funds Report
This is report will detail customer secured funds held by the FCM in a manner identical to the Customer Segregated Funds Report.
For those FCM’s that do not hold customer funds, their Capital Report information will be taken from their monthly Form 1-FR or FOCUS Reports for the FCM’s Capital Report. The Customer Segregated and Secured Funds Report sections will note that they do not hold customer funds under the requirements of CFTC Regulations 1.20 or 30.7. Therefore, no disclosure is required.
The ready availability of these reports will offer you the opportunity work with your clients to increase their comfort levels as well further solidify your client relationships in a manner that creates an environment of transparency and professionalism.
For questions or discuss this further, contact Joseph DeMarco, 708.629.7985 or jd@dscpagroup.com. Joseph DeMarco is a CPA and a partner at DeMarco Sciaccotta Wilkens & Dunleavy, LLP.
