Market regulation · 01/05/1996

Early Warning Reporting Requirements, Minimum Financial Requirements, Prepayment of Subordinated Debt, Gross Collection of Exchange-Set Margin for Omnibus Accounts and Capital Charge on Receivables From Foreign Brokers

Rule 1.12 of the Commodity Futures Trading Commission (Commission or CFTC) sets forth the financial early warning reporting requirements for futures commission merchants (FCMs) and introducing brokers (IBs), which are designed to afford the Commission and industry self-regulatory organizations (SROs) sufficient advance notice of a firm's financial or operational problems to take such protective or remedial action as may be needed to assure the safety of customer funds and the integrity of the marketplace. The Commission has determined to adopt amendments to Commission Rule 1.12, applicable to FCMs only, that will: amend paragraph (g) to require the reporting of a reduction in net capital of 20 percent or more within two business days and a planned reduction in excess adjusted net capital of 30 percent or more two business days prior thereto, and to make that paragraph applicable to all FCMs, rather than just those FCMs subject to the risk assessment reporting requirements of Commission Rule 1.15; require reporting of a margin call that exceeds an FCM's excess adjusted net capital which remains unanswered by the close of business on the day following the issuance of the call; and re