By now, all FCMs are to have made public via their websites certain financial data per CFTC Rule 1.55.
This information is important to Introducing Brokers as it makes available to your firm a way to better assess the credit profile of each FCM.
Each FCM must have posted:
- Daily segregation statement for segregated, secured and cleared swap funds
- Summary capital computation for the most recent 12 months
- Most recent certified audit report
- Unaudited 1FR/Focus reports for the most recent 2 months
- Links to the FCM financial data on the NFA and CFTC website
To further enable customers to make informed decisions about FCMs, certain Risk Disclosures must be made available that are more firm specific. The firm specific risk disclosure must include:
- Firm’s name and contact information
- Firm’s Principals
- FCM’s significant activities and product lines and the amount of capital and assets contributed to each
- Business engaged in on behalf of customers
- Material risks of its operations such as portfolio of permitted investments
- Name of self-regulatory organization
- Material administrative, civil, or criminal actions pending, and any enforcement actions taken in the past 3 years
- Basic information about segregated accounts, collateral management, and investments as well as risks posed by trading in non-US markets in the event of an FCM failure
- How a customer can obtain information about filing a complaint against the FCM with its SRO
- Monthly financial information (i.e. CFTC Rule 1.55)
- Current risk practices, controls and procedures
Where to find this information?
These new rules were put into place to enhance customer confidence shaken from the financial meltdown in 2008. Although this information is to be made public on the FCM’s website, there is no rule in place as to “where.” Upon research, we have found most information to be contained in the “About” tabs on the websites. Some have referred to CFTC Rule 1.55 while some FCMs have tabs called “Financials” on their home page. Taking the time to search for this financial information will only help IBs make informed decisions when choosing an FCM.
Michael Coglianese CPA, P.C. has been contributing to the success of the Introducing Broker community for the past 25 years. Our success within the community stems from our experience and intricate knowledge of the ever changing regulatory environment. To familiarize yourself with our firm, please visit our website at www.cogcpa.com or call Mike directly at 630-351-8942.