On May 30, the National Futures Association issued a notice to its members regarding Section 16 of the NFA Financial Requirements. Beginning July 1, the requirements of Section 16 and the related interpretive notice will apply to futures commission merchants (FCMs) holding cleared swaps customer collateral. Pursuant to Section 16, an FCM must establish written policies and procedures regarding the maintenance of a target residual interest in its cleared swaps customer collateral accounts and comply with the approval and notice requirements related to withdrawing, transferring or otherwise disbursing more than 25% of the FCM’s residual interest in cleared swaps collateral accounts, based upon the most current daily cleared swaps customer collateral calculation made pursuant to CFTC Regulation 22.2(g). In making this calculation, the FCM may exclude disbursements made for the benefit of cleared swaps customers.
Section 16 also requires FCMs to, among other things, provide the NFA with: (i) a cleared swaps customer collateral calculation by noon of each business day; (ii) a monthly notification (beginning with the July 31, 2013 monthly filing) indicating whether any cleared swaps customer collateral was held by an affiliate of the FCM; (iii) the amounts of cleared swaps customer collateral held in cash and each permitted investment under CFTC Regulation 1.25(a) on the 15th and last business day of each month and (iv) the identity of each depository holding cleared swaps customer collateral and the dollar amount held at each such depository on the 15th and last business day of each month.
More information is available here.