[Federal Register: December 31, 2009 (Volume 74, Number 250)]
[Rules and Regulations]
[Page 69279-69283]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de09-12]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 1
RIN 3038-AC66
Revised Adjusted Net Capital Requirements for Futures Commission
Merchants and Introducing Brokers
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rules.
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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is
amending its regulations that prescribe minimum adjusted net capital
requirements for futures commission merchants (``FCMs'') and
introducing brokers (``IBs''). The amendments: increase the required
minimum dollar amount of adjusted net capital that an IB must maintain
from $30,000 to $45,000; increase the required minimum dollar amount of
adjusted net capital that an FCM must maintain from $250,000 to
$1,000,000; amend the computation of an FCM's margin-based minimum
adjusted net capital requirement to incorporate into the calculation
customer and noncustomer positions in over-the-counter derivative
instruments that are submitted for clearing by the FCM to derivatives
clearing organizations (``DCOs'') or other clearing organizations
(``cleared OTC derivative positions''); specify capital deductions for
FCM proprietary cleared OTC derivative positions based on the
deductions required by the Commission's regulations for FCM proprietary
positions in exchange-traded futures contracts and options contracts;
and amend the FCM capital computation to increase the applicable
percentage of the total margin-based requirement for futures, options
and cleared OTC derivative positions in noncustomer accounts to eight
percent.
DATES: Effective March 31, 2010.
FOR FURTHER INFORMATION CONTACT: Thelma Diaz, Associate Director,
Division of Clearing and Intermediary Oversight, 1155 21st Street, NW.,
Washington, DC 20581. Telephone number: 202-418-5137; facsimile number:
202-418-5547; and electronic mail: <A HREF="mailto:[email protected]">[email protected]</A> or Mark Bretscher,
Attorney-Advisor, Division of Clearing and Intermediary Oversight,
Commodity Futures Trading Commission, 525 W. Monroe, Suite 1100,
Chicago, Illinois 60661. Telephone number: 312-596-0529; facsimile
number: 312-596-0714; and electronic mail: <A HREF="mailto:[email protected]">[email protected]</A>.
SUPPLEMENTARY INFORMATION:
I. Background
On May 7, 2009, the Commission published in the Federal Register
for public comment proposed amendments to the minimum financial
requirements applicable to FCMs and IBs (``Proposing Release).\1\ As
noted in the Proposing Release, Section 4f(b) of the Commodity Exchange
Act (``Act'') provides that FCMs and IBs must meet such minimum
financial requirements as the Commission may prescribe to insure that
FCMs and IBs meet their obligations as registrants.\2\ FCMs are subject
to greater capital requirements than IBs because the Act permits FCMs,
but not IBs, to hold funds of customers trading on designated contract
markets and to clear such customer positions with a DCO. CFTC
Regulation 1.17 currently requires IBs and FCMs to maintain adjusted
net capital of $30,000 and $250,000 respectively, or to maintain some
greater amount as determined under other calculations required by the
regulation.\3\
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\1\ 74 FR 21290 (May 7, 2009). Copies of the Proposing Release
and the comment letters received by the Commission are also
available on the Commission's Web site at <A HREF="http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.cftc.gov">http://www.cftc.gov</A>.
\2\ The Act is codified at 7 U.S.C. 1 et seq.
\3\ The Commission regulations cited herein may be found at 17
CFR Ch. I (2009).
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Specifically, Commission Regulation 1.17(a)(1)(iii) requires that
IBs maintain adjusted net capital in an amount that equals or exceeds
the greatest of: $30,000; the amount of adjusted net capital required
by a registered futures association of which the IB is a member; or, if
the FCM is also a securities broker and dealer registered with the U.S.
Securities and Exchange Commission (``SEC''), the amount of net capital
required by SEC Rule 15c3-1(a), 17 CFR Sec. 240.15c3-1(a). Regulation
1.17(a)(1)(i) requires FCMs to maintain adjusted net capital equal to
or in excess of the greatest of: $250,000; the FCM's margin-based or
``risk-based'' capital requirement, which is determined by adding
together eight percent of the total risk margin requirement for
positions in customer accounts, plus four percent of the total risk
margin requirement for positions carried in noncustomer accounts; the
amount of adjusted net capital required by a registered futures
association of which the FCM is a member; or, for an FCM also
registered with the SEC as securities broker and dealer, the amount of
net capital required by SEC Rule 15c3-1(a).
As described in the Proposing Release, the Commission proposed
several amendments to Regulation 1.17(a) that generally would increase
the adjusted net capital requirements of FCMs and IBs. The comment
period closed 60 days after publication in the Federal Register of the
Proposing Release, during which nine comment letters were received.
Responses were submitted by Mindy Yost (``Yost''), an individual non-
registrant; Newedge USA, LLC (``Newedge''), an FCM/broker-dealer; MF
Global, Inc. (``MF Global''), an FCM; R.J. O'Brien & Associates, LLC
(``RJO''), an FCM; FCStone, LLC (``FC Stone''), an FCM; the Securities
Industry and Financial Markets Association (``SIFMA''); CME Group, Inc.
(``CME''); the Futures Industry Association (``FIA''); and the National
Futures Association (``NFA''). The concerns and suggestions of each of
the commenters are addressed below, in connection with the description
of the amendments being adopted by the Commission.\4\
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\4\ The Proposing Release also included a query soliciting
comment on a topic for which no amendments to Commission regulations
have yet been proposed. Specifically, the Commission asked for
comment on the advisability of expanding ANC requirements for FCMs
that are also securities brokers and dealers, by increasing their
ANC by the amount of net capital required by SEC Rule 15c3-1(a). No
commenter supported this potential revision of FCM/BD capital
requirements.
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[[Page 69280]]
II. Required Minimum Dollar Amount of Adjusted Net Capital for IBs and
FCMs
As noted above, Regulation 1.17(a) includes the capital
requirements established by registered futures associations when
determining the level of adjusted net capital that FCM and IBs must
maintain. On July 31, 2006, the NFA, the sole registered futures
association, adopted minimum dollar amount requirements of $45,000 for
IBs and $500,000 for FCMs. These same amounts therefore were
effectively applied in 2006 as adjusted net capital requirements for
IBs and FCMs under CFTC Regulation 1.17(a).
The Proposing Release proposed amending Regulation 1.17(a)(1) to
revise the specified dollar amounts in CFTC Regulation 1.17(a)(1) from
$30,000 to $45,000 for IBs and from $250,000 to $1 million for FCMs. In
light of existing NFA requirements, only the proposal to increase the
minimum dollar amount requirement for FCMs would result in an actual
change in adjusted net capital requirements. The effect of such a
change also would be minimized because, as of September 30, 2009, all
but two FCMs holding customer funds already maintain adjusted net
capital of $1 million or more.
As noted in the Proposing Release, the adjusted net capital
requirements adopted in 1996 of $30,000 for IBs and $250,000 for FCMs
do not reflect inflation and generally are no longer consistent with
the regulatory objective of requiring registrants to maintain a minimum
base of liquid capital from which to meet their financial obligations,
including their obligations to customers. Comparing certain aspects of
the industry then and now, the Commission noted that as of August 31,
1995, there were 255 FCMs, which in total were required to hold
approximately $30 billion of segregated and secured amount funds for
their customers. By June 30, 2009, the total amount of such funds had
escalated to approximately $175 billion, which 132 FCMs were required
to hold for their customers. Thus, not only has there been a dramatic
increase in the amounts that FCMs must hold for their customers, but
those funds have become concentrated among far fewer FCMs. As an
additional measure to ensure the sound financial strength of FCMs and
IBs, the Commission therefore proposed revising the minimum dollar
amount requirements for FCMs and IBs in CFTC Regulation 1.17(a).
The comments received by the Commission generally supported the
revised minimum dollar amounts or offered no comment regarding such
amounts.\5\ RJO, CME and the NFA expressly supported the proposal to
increase the minimum dollar amount capital requirement for FCMs and
IBs. FIA also supported the increase in the minimum dollar amount for
FCM capital requirements, and noted that IBs were already required by
the NFA to maintain adjusted net capital of at least $45,000. SIFMA's
comment was that it lacked sufficient information, either from the CFTC
or derived on its own, on which to base a comment, while the letters
from FC Stone and Newedge were silent on the proposed amendments to
revise the specified dollar amounts in CFTC Regulation 1.17(a)(1). For
the reasons described above, the Commission has determined to adopt the
revised minimum dollar amounts as proposed in the Proposing Release.
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\5\ The objections in Yost's letter were directed primarily to
the requirement for her to register as an IB.
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III. Cleared OTC Positions in FCM Capital Calculations
In 2004, the Commission amended Regulation 1.17(a)(1)(i)(B) to
include a ``risk-based'' capital computation based on margin, or
performance bond, requirements applicable to positions carried by the
FCM for its customers and noncustomers.\6\ Specifically, Commission
Regulation 1.17(a)(1)(i)(B) was amended to require an FCM to compute
its risk-based capital requirement as the sum of: (1) Eight percent of
the total risk margin \7\ requirement for positions carried by the FCM
in customer accounts and (2) four percent of the total risk margin
requirement for positions carried by the FCM in noncustomer accounts.
The Commission did not revise its regulations with respect to
proprietary futures and granted options positions of FCMs, as such
positions were already subject to capital deductions under Commission
Regulation 1.17(c)(5)(x).\8\
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\6\ The term noncustomer refers generally to affiliated persons
of the FCM, including certain officers and other employees.
\7\ The term ``risk margin'' is defined at Commission Regulation
1.17(b)(8).
\8\ In general, an FCM's proprietary futures and granted options
positions are subject to a deduction equal to 100 percent of the
maintenance margin requirement for positions that are cleared by
clearing organizations of which the FCM is a clearing member, and
150 percent of the maintenance margin requirement for positions that
are cleared by clearing organizations of which the FCM is not a
clearing member.
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The Proposing Release noted that the risk-based calculations of
FCMs include margin requirements for positions in cleared OTC
derivative instruments \9\ held in customer segregated accounts
governed by Section 4d of the Act and Commission regulations. Various
DCOs, as part of their increasing efforts to clear OTC derivative
instruments, have requested Commission orders authorizing their
clearing FCMs to commingle customers' money, securities, and other
property margining OTC-cleared derivative positions with the money,
securities, and other property deposited by said customers to margin
futures and options positions in segregated accounts established
pursuant to Section 4d of the Act.\10\ Therefore, the risk exposure of
clearing OTC derivative instruments extends not only to the FCM, but
also to the segregated funds of its OTC, futures and options customers.
Where OTC customer funds are commingled with the funds of futures and
options customers, the Commission has deemed it necessary to include
OTC customer positions in the definition of ``customer
[[Page 69281]]
accounts'' for purposes of computing an FCM's risk-based capital
requirement.
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\9\ OTC derivative instrument is defined by Section 408(2) of
the Federal Deposit Insurance Corporation Improvement Act, 12
U.S.C.A. Sec. 4421. As defined there, the term ``over-the-counter
derivative instrument'' includes ``(A) any agreement, contract, or
transaction, including the terms and conditions incorporated by
reference in any such agreement, contract, or transaction, which is
an interest rate swap, option, or forward agreement, including a
rate floor, rate cap, rate collar, cross-currency rate swap, basis
swap, and forward rate agreement; a same day-tomorrow, tomorrow-
next, forward, or other foreign exchange or precious metals
agreement; a currency swap, option, or forward agreement; an equity
index or equity swap, option, or forward agreement; a debt index or
debt swap, option, or forward agreement; a credit spread or credit
swap, option, or forward agreement; a commodity index or commodity
swap, option, or forward agreement; and a weather swap, weather
derivative, or weather option; (B) any agreement, contract or
transaction similar to any other agreement, contract, or transaction
referred to in this clause that is presently, or in the future
becomes, regularly entered into by parties that participate in swap
transactions (including terms and conditions incorporated by
reference in the agreement) and that is a forward, swap, or option
on one or more occurrences of any event, rates, currencies,
commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic or other indices or
measures of economic or other risk or value; (C) any agreement,
contract, or transaction excluded from the Commodity Exchange Act
under section 2(c), 2(d), 2(f), or 2(g) of such Act, or exempted
under section 2(h) or 4(c) of such Act; and (D) any option to enter
into any, or any combination of, agreements, contracts or
transactions referred to in this subparagraph.''
\10\ Examples of Commission orders under Section 4d of the Act
related to OTC clearing by DCOs include an Order dated May 30, 2002
regarding Treatment of Funds Held in Connection with the Clearing of
Over-the-Counter Products by the New York Mercantile Exchange, and
also Orders dated March 3, 2006 and September 26, 2008 regarding
Treatment of Funds Held in Connection with the Clearing of Over-the-
Counter Products by Chicago Mercantile Exchange, Inc.
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FCMs may also, however, clear OTC derivative instruments for which
the margin received from customers is not held in segregated accounts
under Section 4d of the Act. The Proposing Release therefore included
amendments to enhance and update the provisions of Regulation 1.17 to
reflect the increase in clearing by FCMs of OTC derivative instruments.
Under the proposed amendments to paragraphs (b) and (c) of Regulation
1.17, the capital treatment for all cleared OTC derivative instrument
positions would be similar to the capital treatment applicable to
exchange-traded futures and options positions that are carried by the
FCM for itself, its customers, or its noncustomers.
Five commenters (RJO, MF Global, CME, FIA and the NFA) supported
the Commission's proposal to require FCMs to account for all cleared
OTC derivative positions carried for customers and noncustomers in
their risk-based capital calculations. They also supported the
Commission's proposal to require FCMs to take proprietary capital
deductions for their cleared OTC derivative positions similar to the
capital deductions required for their proprietary futures and options
positions. Yost, FC Stone and Newedge made no comments regarding either
proposal, and SIFMA stated that it was unable to offer a definitive
view on the appropriateness of the proposed changes and suggested that
the Commission refrain from taking action pending further analysis of
the issue. SIFMA also expressed concern that the capital requirements
for cleared OTC positions be coordinated among regulators to prevent
regulatory arbitrage or capital disincentives to clear such
transactions.
The adoption of the proposed amendments will neither prohibit nor
inhibit the existing interaction among Commission staff and the staff
members of other regulators of financial institutions regarding matters
of common interest and concern. To the extent that new developments
related to clearing suggest that further modification of the
Commission's capital regulations may be appropriate, the Commission may
proceed, as applicable, by issuing appropriate interpretive guidance to
FCMs or by requesting notice and comment on other proposed amendments
to its regulations.\11\
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\11\ Included in such continued review and analysis is the
possible revision of the definition of ``cover'' in 1.17(j) with
respect to cleared OTC derivative instruments, for which the
Commission requested comment but did not propose any specific
amendments in the Proposing Release. Only the CME and NFA commented
on this question, and both agreed with the general proposition that
the definition should be revised to reflect that proprietary
positions in cleared OTC derivatives instruments may be covered by
positions that would qualify as cover for proprietary futures and
option positions.
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The Commission has therefore adopted the amendments to 1.17(b) and
(c) as proposed in the Proposing Release. As hereby amended, the terms
proprietary account, noncustomer account, and customer account, as
defined in Regulations 1.17(b)(3), (b)(4), and (b)(7), are expanded to
include ``cleared OTC derivative positions'', which are defined in
Regulation 1.17(b)(9) as the over the counter derivative instrument
positions of any person \12\ in accounts carried on the books of the
FCM and cleared by any organization permitted to clear such instruments
under the laws of the relevant jurisdiction. Additionally, the term
``cleared OTC customers'' is defined in paragraph (b)(10), and such
customers have been included among the FCM customers listed in
paragraph (b)(2) of Regulation 1.17. Finally, the Commission has
amended Regulation 1.17(c)(5)(x) to require FCMs to take proprietary
capital deductions for their cleared OTC derivative positions similar
to the capital deductions required for their proprietary futures and
options positions.
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\12\ The term ``person'' is defined in CFTC Regulation 1.3(u).
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III. Increasing Risk Margin Percentage for Noncustomer Positions
The Commission also proposed amending Regulation 1.17 so that an
FCM's risk-based capital requirement would be ten percent of the total
risk margin requirement for positions carried by the FCM in both
customer accounts and noncustomer accounts. The proposed increase
represented a more significant increase with respect to noncustomer
accounts, as the FCM's risk-based capital calculations currently
includes a lower required percentage of risk maintenance margin for
noncustomer positions (four percent) than the required percentage for
the same positions in customer accounts (eight percent).
The Commission received no comments supporting the general increase
for all margin-based capital calculations to ten percent. The reasons
cited for this lack of support varied among the commenters, but the
Commission is mindful that a common underlying theme was that such an
indiscriminate, broad-brush approach may be inconsistent with the
current financial environment's continuing shifts and alterations. In
contrast, the majority of commenters (RJO, MF Global, CME, FIA and the
NFA) endorsed the Commission's proposed amendment to increase from four
percent to eight percent the required percentage applicable to
noncustomer accounts in the risk-based capital calculations of FCMs. In
proposing this amendment, the Commission had noted that when the lower
risk margin percentage for noncustomer positions had been adopted in
2004, the Commission and the self-regulatory organizations believed
that noncustomers' accounts reflected less credit risk to FCMs and the
clearing system because they were guaranteed by a parent organization
or other affiliated entity. However, the majority of the commenters
agreed with the Commission's conclusion in the Proposing Release that
recent events had demonstrated that the risk associated with
noncustomer accounts may not necessarily be less than the risk
associated with customer accounts. The Commission has therefore adopted
as proposed the amendment to Regulation 1.17(a) that requires the
application of the same percentage with respect to the noncustomer and
customer risk margin requirements, thus requiring the FCM's total risk
margin requirement to be multiplied by eight percent.
IV. Effective Date
The Commission stated in the Proposing Release that it was
contemplating an effective date of sixty days after publication in the
Federal Register of any of the amendments adopted as final by the
Commission. The Commission received comments from both the FIA and NFA
on this topic, each of whom urged a longer period of time before the
effective date, in order to avoid a potential undue burden as a result
of the increased capital requirements being adopted for FCMs. FIA
suggested a period of 120 days after publication before the effective
date, while NFA stated only that the period should be longer than 60
days. Taking into consideration these comments and the purposes of the
capital requirements adopted by this final rulemaking, the amendments
adopted herein will be effective as of the date 90 days after their
publication in the Federal Register.
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq.,
requires
[[Page 69282]]
that agencies, in amending their rules, consider the impact of those
amendments on small businesses. The Commission has previously
determined that, based upon the fiduciary nature of FCM/customer
relationships, as well as the requirement that FCMs meet minimum
financial requirements, FCMs should be excluded from the definition of
small entity.\13\ With respect to IBs, the amendment to the minimum
adjusted net capital requirement for an IB merely conforms the
Commission's requirement to that of the NFA and, therefore, should have
no impact on an IB's financial operations. Thus, the proposal has no
significant economic impact on IBs. Accordingly, the Chairman, on
behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. Sec.
605(b), that the action it is taking herein will not have a significant
economic impact on a substantial number of small entities.
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\13\ See 47 FR 18618, 18619 (Apr. 30, 1982).
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B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995, (``PRA'') 44 U.S.C. 3501 et
seq., imposes certain requirements on Federal agencies (including the
Commission) in connection with their conducting or sponsoring any
collection of information as defined by the PRA. This rulemaking does
not include any increase in information collection requirements. The
increase in the percentage requirements applicable to risk margin
requirements for customer and noncustomer positions included in risk-
based capital calculation constitutes a minor change to line item 22 of
the Form 1-FR-FCM, as does the minor change to Line 16 to include OTC-
cleared products, but neither change would alter the related reporting
burden. The above analysis was included in the proposing release, and
as required by the PRA, the Commission submitted a copy of this section
to the Office of Management and Budget (``OMB'') for its review. No
comments were received in response to the Commission's invitation in
the notice of proposed rulemaking \14\ to comment on any change in the
potential paperwork burden associated with these rule amendments.
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\14\ 74 FR 21293 (May 7, 2009).
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C. Cost-Benefit Analysis
Section 15(a) of the Act, as amended by Section 119 of the
Commodity Futures Modernization Act,\15\ requires the Commission to
consider the costs and benefits of its action before issuing a new
regulation under the Act. By its terms, Section 15(a) as amended does
not require the Commission to quantify the costs and benefits of a new
regulation or to determine whether the benefits of the proposed
regulation outweigh its costs. Rather, Section 15(a) simply requires
the Commission to ``consider the costs and benefits'' of its action.
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\15\ 7 U.S.C. 19(a).
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Section 15(a) further specifies that costs and benefits shall be
evaluated in light of five broad areas of market and public concern:
protection of market participants and the public; efficiency,
competitiveness, and financial integrity of futures markets; price
discovery; sound risk management practices; and other public interest
considerations. The Commission, in its discretion, can choose to give
greater weight to any one of the five enumerated areas and determine
that, notwithstanding its costs, a particular regulation is necessary
or appropriate to protect the public interest or to effectuate any of
the provisions or to accomplish any of the purposes of the Act.
The Commission has considered the costs and benefits of the
proposed amendments and determined that the amendments will result in
additional protection of market participants and the public,
enhancements to sound risk management practices, enhanced financial
integrity of futures markets and other public interest considerations
and should have minimal or no effect on the following areas:
efficiency, competitiveness or price discovery. After considering these
factors, the Commission has determined to adopt the amendments to
Regulation 1.17 as discussed herein.
List of Subjects in 17 CFR Part 1
Brokers, Commodity futures, Minimum financial requirements,
Reporting and recordkeeping requirements.
0
Accordingly, 17 CFR Chapter I is amended as follows:
PART 1--GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT
0
1. The authority citation for Part 1 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 5, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g,
6h, 6i, 6j, 6k, 6l, 6m, 6n, 6o, 6p, 7, 7a, 7b, 8, 9, 12, 12a, 12c,
13a, 13a-1, 16, 16a, 19, 21, 23 and 24, as amended by the Commodity
Futures Modernization Act of 2000, appendix E of Pub. L. 106-554,
114 Stat. 2763 (2000).
0
2. Section 1.17 is amended by:
0
a. Revising paragraphs (a)(1)(i)(A), (a)(1)(i)(B), and (a)(1)(iii)(A);
0
b. Revising paragraphs (b)(2), (b)(3), introductory text of (b)(4),
introductory text of (b)(7) and introductory text of (b)(8);
0
c. Adding new paragraphs (b)(9) and (b)(10); and
0
d. Revising the introductory text of paragraph (c)(5)(x) to read as
follows:
Sec. 1.17 Minimum financial requirements for futures commission
merchants and introducing brokers.
(a)(1)(i) * * *
(A) $1,000,000;
(B) The futures commission merchant's risk-based capital
requirement, computed as eight percent of the total risk margin
requirement for positions carried by the futures commission merchant in
customer accounts and noncustomer accounts.
* * * * *
(iii) * * *
(A) $45,000;
* * * * *
(b) * * *
(1) * * *
(2) Customer means customer (as defined in Sec. 1.3(k)), option
customer (as defined in Sec. 1.3(jj) and in Sec. 32.1(c) of this
chapter), cleared over the counter customer (as defined in Sec.
1.17(b)(10)), and includes a foreign futures, foreign options customer
(as defined in Sec. 30.1(c) of this chapter).
(3) Proprietary account means an account in which commodity
futures, options or cleared over the counter derivative positions are
carried on the books of the applicant or registrant for the applicant
or registrant itself, or for general partners in the applicant or
registrant.
(4) Noncustomer account means an account in which commodity
futures, options or cleared over the counter derivative positions are
carried on the books of the applicant or registrant which is either:
* * * * *
(7) Customer account means an account in which commodity futures,
options or cleared over the counter derivative positions are carried on
the books of the applicant or registrant which is either:
* * * * *
(8) Risk margin for an account means the level of maintenance
margin or performance bond required for the customer or noncustomer
positions by the applicable exchanges or clearing organizations, and,
where margin or performance bond is required only for accounts at the
clearing organization, for purposes of the FCM's risk-based capital
calculations applying the same margin or performance bond requirements
to
[[Page 69283]]
customer and noncustomer positions in accounts carried by the FCM,
subject to the following.
* * * * *
(9) Cleared over the counter derivative positions means ``over the
counter derivative instrument'' (as defined in 12 U.S.C. 4421)
positions of any person in accounts carried on the books of the futures
commission merchant and cleared by any organization permitted to clear
such instruments under the laws of the relevant jurisdiction.
(10) Cleared over the counter customer means any person that is not
a proprietary person as defined in Sec. 1.3(y) and for whom the
futures commission merchant carries on its books one or more accounts
for the over the counter-cleared derivative positions of such person.
(c) * * *
(5) * * *
(x) In the case of open futures contracts or cleared OTC derivative
positions and granted (sold) commodity options held in proprietary
accounts carried by the applicant or registrant which are not covered
by a position held by the applicant or registrant or which are not the
result of a ``changer trade'' made in accordance with the rules of a
contract market:
* * * * *
Issued in Washington, DC, on December 24, 2009, by the
Commission.
David A. Stawick,
Secretary of the Commission.
[FR Doc. E9-31058 Filed 12-30-09; 8:45 am]
Last Updated: December 31, 2009