During a recent routine NFA audit of one of our Introducing Broker (IB) clients, it became apparent that NFA is enforcing the following:
Security Deposits with your FCM are treated as 50% current and 50% noncurrent for capital purposes.
Escrow Accounts (or other trading accounts) at your FCM are considered current for capital purposes but has a 50% haircut during the Net Capital Computation.
If the Escrow account is being traded by your firm at a level equivalent to the dollars in the account, then the account is considered a firm trading account and the account balance is considered current without the 50% haircut. However, if there are uncovered open positions in the account, the standard haircut against net capital applies on those open positions.
An Error account with your FCM may also be reviewed in the same manner as an Escrow account.
Therefore, we recommend reviewing your accounts held at your FCM to ensure that your capital position is not being jeopardized.
Call us if you need further clarification.
Michael Coglianese CPA, P.C.
mike@cogcpa.com
630-351-8942
