Capital Markets Services To Pay CFTC $275,000 For Allegedly Failing Minimum Financial Requirements

The company's adjusted net capital dropped below capital requirement by as much as $13 million at one point. The CFTC

cftcA statement released by the US Commodity Futures Trading Commission outlines that the regulator has simultaneously filed an order and settled charges with CFTC-registered Futures Commission Merchant (FCM) and former Retail Foreign Exchange Dealer (RFED) Capital Markets Services LLC. Allegedly the company has failed to comply with the minimum financial requirements for FCMs and RFEDs between March 2009 and October 2012.

The company has been registered as an FCM since January 2002 and as an RFED from September 2009 till the middle of December 2010. The CFTC has settled with the company after full cooperation has been provided throughout the investigation.

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The order that has been filed by the CFTC states that Capital Markets Services (CMS) has not been in compliance with regulations for FCMs that are obliged to maintain adjusted net capital (ANC) equal to or above the greatest of $1,000,000 various other measures, which included the “amount if ANC required by a registered futures association of which it is a member.”

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While CMS has been a Forex Dealer Member (FDM) with the National Futures Association (NFA) between January 2009 and mid-December 2010, the company was subjected to the NFA’s FDM Financial Requirements, which imposed ANC requirements ranging between $15 million and about $21 million plus 5% of the total retail obligation above $10 million at all times. The firm’s ANC requirement as an RFED was about $21 million.

According to the CFTC, for the period in question between March 2009 and October 2012 the company has failed to maintain its required ANC for at least 17 different months and the Order allegedly finds that the company was short of $13 million at one point. The settlement outlined by the CFTC in its press release essentially confirms why so many companies in the US have left the business, squeezed by increased capital requirements, tighter regulations and reduced ability to compete.

CMS’s President and chief operating officer Eugene Hawkin said in a statement to Forex Magnates that “throughout the period in question, CMS maintained consolidated adjusted net capital in excess of the amounts it was required to by CFTC regulations. We were happy to adjust our procedures and meet the minimum ANC requirement on an unconsolidated stand-alone basis and we did so, the same day we were informed of this by the CFTC.”

 

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