US Brokers to Face New Reporting Practises under NFA’s Segregated Funds Reports

US Financial services providers will be required to submit their semi-monthly segregated client funds data under new requirements. The watchdog

US derivatives financial watchdog, the NFA, has announced new reporting requirements for regulated providers. Financial services firms operating in the derivatives space will display key information relating to Customer Segregated Funds & Secured Amount Funds in percentages.

The NFA reported that it has altered the Segregated Investment Detail Report SIDR, a semi-monthly reporting requirement registered brokers adhere to if they hold customer segregated funds, secured amount funds and/or cleared swaps customer collateral. The current amendment obliges users to report in order to collect this information as percentages.

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The latest amendment follows on from ongoing changes the watchdog has been making in light of recent mishaps with brokerage firms. Two years ago, the NFA’s Board of Directors stated that providers needed to create a new layer of transparency by submitting key operating information.

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The regulator determined that certain financial-related information submitted by Futures Commission Merchants (FCMs) under the Financial Requirements Section 16 should be publicly displayed on each FCM’s BASIC page through the FCM Capital Report, FCM Customer Segregated Funds Report, FCM Customer Secured Amount Funds Report and FCM Cleared Swaps Customer Collateral Report.

The watchdog has been actively reviewing the process and searching for viable solutions that prevent another MF Global-type collapse. In November 2013, the CFTC amended Regulations 1.32, 30.7(l) and 22.2(g) requiring FCMs to file semi-monthly reports that include the information required by the SIDR, as well as the amount of customer funds held at clearing organizations and brokers, the amount of customer-owned securities that are on deposit as margin collateral and information regarding repurchase transactions involving customer funds or securities.

The new rules will go live later this month on the 17th of November. Firms will submit the SIDR through the NFA’s Win Jammer online reporting system. The SIDR must be filed with the NFA by noon on the business day following the 15th and the last business day of each month for information as of the close of the 15th (or the following business day if the 15th falls on a weekend) and the last business day of each month.

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