On July 13th, the CFTC approved new financial rules submitted by the National Futures Association that enhance protections to customer funds held by futures commission merchants ("FCMs"). The new NFA rules require FCMs to strengthen their controls over the treatment and monitoring of funds held for customers trading on U.S. contract markets (segregated accounts) and for funds held for foreign futures and foreign option customers trading on foreign contract markets (Part 30 secured accounts). Under the new rules, FCMs will be required to:
- Hold sufficient funds in Part 30 secured accounts to meet their total obligations to customers trading on foreign markets computed under the net liquidating equity method representing the total account balance owed to customers. FCMs will no longer be allowed to use the alternative method, which had allowed them to hold a lower amount of funds representing the margin on their foreign futures;
- Maintain written policies and procedures governing the maintenance of excess (i.e., proprietary or residual) funds in customer segregated accounts and Part 30 secured accounts;
- Obtain pre-approval from senior management for any withdrawals that are in excess of 25 percent of the excess segregated or Part 30 secured funds that are not for the benefit of customers;
- File notice with NFA of any withdrawal of 25 percent or more of the excess segregated or Part 30 secured amount funds that are not for the benefit of customers; and
- File on a daily basis with the NFA segregation and Part 30 secured amount computations.