Release: #5004-04
For Release: October 4, 2004

CFTC Revises Financial Reporting by FCMs to Reflect Risk-Based Capital

Effective September 30, 2004, the U.S. Commodity Futures Trading Commission (CFTC) has adopted a new risk-based approach to setting minimum capital requirements for futures commission merchants (FCMs), which uses percentages of the maintenance margins for positions that FCMs carry for their customers and for certain FCM affiliates and employees.

The CFTC and the futures self-regulatory organizations have updated their electronic filing systems to permit FCMs to include the new computation in their Form 1-FR-FCMs. For those FCMs that also are registered with the Securities and Exchange Commission as broker-dealers, the FOCUS report has also been revised to reflect the new capital requirements. The CFTC has also issued an updated version of the Instructions Manual for the Form 1-FR-FCM, a copy of which is available to the public at www.cftc.gov.

The new rule follows a CFTC staff report that concluded that such risk-based capital requirements better reflect the extent to which FCMs are exposed to the risks of the positions they carry. In addition, adopting a minimum capital computation that is based upon the risk of the specific positions carried by the firm should allow for the more efficient utilization of capital.

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Media Contacts
Alan Sobba
(202) 418-5080
R. David Gary
(202) 418-5085
Office of External Affairs

Related Documents
Final rules
Form 1-FR-FCM Instructions
Review of SRO Risk-Based Capital Requirements