The Commodity Futures Trading Commission has proposed amendments to the minimum adjusted net capital requirements for futures commission merchants (FCMs) and introducing brokers (IBs). Under the CFTC’s proposed amendments, the minimum dollar amount of adjusted net capital would be raised to $1 million for an FCM and $45,000 for an IB. The proposal also would include customer and noncustomer positions in cleared over-the-counter (OTC) derivative instruments (whether cleared in the U.S. or abroad) in the calculation of an FCM’s “risk-based” adjusted net capital requirement, and would require FCMs to take charges to their regulatory capital (“haircuts”) for cleared OTC positions that are carried in proprietary accounts in a manner comparable to those that are required for exchange-traded futures and options. In addition, the proposal would increase the risk margin requirement for both customer and noncustomer positions to 10% (from 8% and 4%, respectively).
In the same proposal, the CFTC has requested comment on the advisability of increasing the CFTC’s adjusted net capital requirements for FCMs that are also securities broker-dealers to include, in addition to the amount that would otherwise be required by CFTC rules, an amount equal to such broker-dealer/FCM’s net capital requirement under Securities and Exchange Commission Regulation 15c3-1. Currently, CFTC and SEC regulations each require a dually registered firm to maintain net capital in excess of the higher of the two capital requirements. If the CFTC were to move forward, a dually registered firm’s requirement would be the sum of the two requirements.
The comment period for the proposal closes on July 6.