NFA recently amended NFA Financial Requirements Section 4 to require FCMs that hold customer segregated funds under CFTC Regulation 1.20, customer secured amount funds under CFTC Regulation 30.7 or cleared swaps customer collateral under CFTC Regulation 22.2 (collectively "customer segregated funds") to instruct the depositories holding these funds to report the balances in these accounts on a daily basis to a third party designated by NFA. The amendments also provide that a depository must comply with this request in order to be an acceptable depository for customer segregated funds. CME Group, Inc. (CME) has adopted similar requirements for its FCM clearing members. As previously communicated to FCMs, NFA and CME selected AlphaMetrix360, LLC to act as the aggregator of this information. Over the last several weeks, NFA and CME have been working closely with FCMs and their respective banks that hold customer segregated funds to ensure that those banks have established connectivity with AlphaMetrix360 to report the daily balances.
Although the Financial Requirements Section 4 applies to all depositories holding customer segregated funds, NFA is implementing the process in phases. The first phase, which requires bank and trust company depositories to report end of day cash and securities balances, is effective February 15, 2013. As a result, FCMs should ensure that all banks and trust companies holding customer segregated cash and securities report the end of day balances in those accounts to AlphaMetrix360 beginning with the February 15, 2013 balances in order to be considered an acceptable depository for customer segregated funds. Any FCM with concerns regarding this requirement should contact its DSRO to resolve the matter.
Although the first phase is limited to banks and trust companies and segregated cash and securities balances, NFA intends to expand the requirements over the next several months to require all segregated funds depositories, including derivatives clearing organizations and other clearing FCMs, to report all customer segregated funds balances. NFA, in coordination with the CME, will provide FCMs with sufficient advance notice before phasing in other depositories and reporting requirements and will of course work with the FCM and depository communities in implementing the requirements.
