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NFA Regulatory Reminder Regarding Obligations Guaranteed by FCMs, FDMs and IBs

June 9th | 2020



On June 2, 2020, the NFA reminded its members that a Joint Audit Committee Regulatory Alert is also applicable to NFA members (e.g., Retail Foreign Exchange Dealers and Introducing Brokers). The Joint Audit Committee is a representative committee of U.S. futures exchanges and regulatory organizations including: Bitnomial Exchange, CBOT, CFE, CME, COMEX, Eris Exchange, ICE Futures U.S., Inc., MGEX, NADEX, NFA, NFX, Nodal, NYMEX, OCX, Small Exchange and trueEX.


The alert highlighted that FCMs shall not guarantee, endorse, or assume directly or indirectly any obligation or liability of a subsidiary or affiliate unless the obligation or liability is reflected in the computation of adjusted net capital pursuant to CFTC Regulation 1.17(f)(4). Also, consistent with the CFTC’s 1-FR Instruction Manual, any guaranteed obligations and liabilities of subsidiaries or affiliates which are not otherwise reported through consolidation of that entity must be reflected in the computation of adjusted net capital. CFTC Regulations require the full amount of the guaranteed obligation or liability to be reflected in the computation of adjusted net capital.

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