NFA Issues Interpretive Notice on FCM Financial Practices and Excess Segregated Funds, Secured Amounts, and Cleared Swaps Customer Collateral Disbursements
The NFA issued an interpretive notice regarding NFA Rules Section 16 ("FCM Financial Practices and Excess Segregated Funds/Secured Amount Disbursements"), which is designed to establish requirements regarding the maintenance of an FCM's residual interest in customer segregated funds, customer secured amount, and cleared swaps customer collateral accounts. The notice provides an analysis of Section 16 requirements and further regulatory measures that FCMs must adopt including:
- Requirements upon FCMs relating to certain withdrawals of their residual interest;
- FCMs must report certain financial and operational information to the NFA in the form and manner prescribed by the NFA; and
- If the NFA believes an FCM's financial condition may not have sufficient funds to remain in continual compliance with the obligations under Section 16, the NFA may issue a Member Responsibility Action against the FCM, which may suspend or restrict the FCM's operations.