CFTC Issues No-Action Relief to Introducing Brokers for Certain Financial Reporting Requirements (CFTC Letter 15-02)

The CFTC Division of Swap Dealer and Intermediary Oversight issued no-action relief to certain introducing brokers ("IBs") with respect to net capital and financial reporting requirements under CFTC Rule 1.10 ("Financial Reports of Futures Commission Merchants and Introducing Brokers") and Rule 1.17 ("Minimum Financial Requirements for Futures Commission Merchants and Introducing Brokers").

The conditioned relief permits foreign-domiciled IBs to file audited and unaudited form 1-FR-IBs, as applicable, using local accounting principles in effect where the IB is domiciled in lieu of U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards. In addition, eligible foreign-domiciled IBs will not be required to apply certain foreign currency capital charges under Rule 1.17 and staff guidance.

The relief also permits IBs to recognize as a current asset those commission receivable balances that are promptly billed and due from their over-the-counter swap customers.

See: CFTC Letter 15-02; CFTC Press Release.