17 CFR 1.52 - Self-regulatory organization adoption and surveillance of minimum financial requirements.

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§ 1.52 Self-regulatory organization adoption and surveillance of minimum financial requirements.
(a) Each self-regulatory organization must adopt rules prescribing minimum financial and related reporting requirements for members who are registered futures commission merchants, registered retail foreign exchange dealers, or registered introducing brokers. The self-regulatory minimum financial and related reporting requirements must be the same as, or more stringent than, the requirements contained in §§ 1.10 and 1.17 of this chapter, for futures commission merchants and introducing brokers, and §§ 5.7 and 5.12 of this chapter for retail foreign exchange dealers; provided, however, a self-regulatory organization may permit its member registrants that are registered with the Securities and Exchange Commission as securities brokers or dealers to file (in accordance with § 1.10(h) of this chapter) a copy of their Financial and Operational Combined Uniform Single Report under the Securities Exchange Act of 1934, Part II, Part IIA, or Part II CSE, in lieu of Form 1-FR. The definition of adjusted net capital must be the same as that prescribed in § 1.17(c) of this chapter for futures commission merchants and introducing brokers, and § 5.7(b)(2) of this chapter for futures commission merchants offering or engaging in retail forex transactions and for retail foreign exchange dealers. (b) Each self-regulatory organization must establish and operate a supervisory program for the purpose of assessing whether each member registrant is in compliance with the applicable self-regulatory organization and Commission rules and regulations governing minimum net capital and related financial requirements, the obligation to segregate customer funds, financial reporting requirements, recordkeeping requirements, and sales practice and other compliance requirements. The supervisory program also must address the following elements:
(1) Adequate levels and independence of audit staff. A self-regulatory organization must maintain staff of an adequate size, training, and experience to effectively implement a supervisory program. Staff of the self-regulatory organization, including officers, directors and supervising committee members, must maintain independent judgment and its actions must not impair its independence nor appear to impair its independence in matters related to the supervisory program. The self-regulatory organization must provide annual ethics training to all staff with responsibilities for the supervisory program.
(2) Ongoing surveillance. A self-regulatory organization's ongoing surveillance of member registrants must include the review and analysis of financial reports and regulatory notices filed by member registrants with the designated self-regulatory organization.
(3) High-risk firms. A self-regulatory organization's supervisory program must include procedures for identifying member registrants that are determined to pose a high degree of potential financial risk, including the potential risk of loss of customer funds. High-risk member registrants must include firms experiencing financial or operational difficulties, failing to meet segregation or net capital requirements, failing to maintain current books and records, or experiencing material inadequacies in internal controls. Enhanced monitoring for high risk firms should include, as appropriate, daily review of net capital, segregation, and secured calculations, to assess compliance with self-regulatory and Commission requirements.
(4) On-site examinations. (i) A self-regulatory organization must conduct routine periodic on-site examinations of member registrants. Member futures commission merchants and retail foreign exchange dealers must be subject to on-site examinations no less frequently than once every eighteen months. A self-regulatory organization may establish a risk-based method of establishing the scope of each on-site examination, provided however, that the scope of each on-site examination of a futures commission merchant or retail foreign exchange dealer must include an assessment of whether the registrant is in compliance with applicable Commission and self-regulatory organization minimum capital and customer fund protection requirements, recordkeeping, and reporting requirements.
(ii) A self-regulatory organization must establish the frequency of on-site examinations of member introducing brokers that do not operate pursuant to guarantee agreements with futures commission merchants or retail foreign exchange dealers using a risk-based approach, provided however, that each introducing broker is subject to an on-site examination no less frequently than once every three years.
(iii) A self-regulatory organization must conduct on-site examinations of member registrants in accordance with uniform audit programs and procedures that have been submitted to the Commission.
(5) Adequate documentation. A self-regulatory organization must adequately document all aspects of the operation of the supervisory program, including the conduct of risk-based scope setting and the risk-based surveillance of high-risk member registrants, and the imposition of remedial and punitive action(s) for material violations.
(c) Any two or more self-regulatory organizations may file with the Commission a plan for delegating to a designated self-regulatory organization, for any registered futures commission merchant, retail foreign exchange dealer, or introducing broker that is a member of more than one such self-regulatory organization, the responsibility of:
(1) Monitoring and auditing for compliance with the minimum financial and related reporting requirements adopted by such self-regulatory organizations and the Commission in accordance with paragraphs (a) and (b) of this section; and
(2) Receiving the financial reports necessitated by such minimum financial and related reporting requirements.
(d) Any plan filed under this section may contain provisions for the allocation of expenses reasonably incurred by the designated self-regulatory organization among the self-regulatory organizations participating in such a plan.
(e) A plan's designated self-regulatory organization must report to:
(1) That plan's other self-regulatory organizations any violation of such other self-regulatory organizations' rules and regulations for which the responsibility to monitor, audit or examine has been delegated to such designated self-regulatory organization under this section; and
(2) The Commission any violation of a self-regulatory organization's rules and regulations or any violation of the Commission's regulations for which the responsibility to monitor, audit or examine has been delegated to such designated self-regulatory organization under this section.
(f) The self-regulatory organizations may, among themselves, establish programs to provide access to any necessary financial or related information.
(g) After appropriate notice and opportunity for comment, the Commission may, by written notice, approve such a plan, or any part of the plan, if it finds that the plan, or any part of it:
(1) Is necessary or appropriate to serve the public interest;
(2) Is for the protection and in the interest of customers;
(3) Reduces multiple monitoring and multiple auditing for compliance with the minimum financial rules of the self-regulatory organizations submitting the plan of any futures commission merchant, retail foreign exchange dealer, or introducing broker that is a member of more than one self-regulatory organization;
(4) Reduces multiple reporting of the financial information necessitated by such minimum financial and related reporting requirements by any futures commission merchant, retail foreign exchange dealer, or introducing broker that is a member of more than one self-regulatory organization;
(5) Fosters cooperation and coordination among the self-regulatory organizations; and
(6) Does not hinder the development of a registered futures association under section 17 of the Act.
(h) After the Commission has approved a plan, or part thereof, under § 1.52(g), a self-regulatory organization relieved of responsibility must notify each of its members that are subject to such a plan:
(1) Of the limited nature of its responsibility for such a member's compliance with its minimum financial and related reporting requirements; and
(2) Of the identity of the designated self-regulatory organization that has been delegated responsibility for such a member.
(i) The Commission may at any time, after appropriate notice and opportunity for hearing, withdraw its approval of any plan, or part thereof, established under this section, if such plan, or part thereof, ceases to adequately effectuate the purposes of section 4f(b) of the Act or of this section.
(j) Whenever a registered futures commission merchant, a registered retail foreign exchange dealer, or a registered introducing broker holding membership in a self-regulatory organization ceases to be a member in good standing of that self-regulatory organization, such self-regulatory organization must, on the same day that event takes place, give electronic notice of that event to the Commission at its Washington, DC, headquarters and send a copy of that notification to such futures commission merchant, retail foreign exchange dealer, or introducing broker.
(k) Nothing in this section shall preclude the Commission from examining any futures commission merchant, retail foreign exchange dealer, or introducing broker for compliance with the minimum financial and related reporting requirements to which such futures commission merchant, retail foreign exchange dealer, or introducing broker is subject.
(l) In the event a plan is not filed and/or approved for each registered futures commission merchant, retail foreign exchange dealer, or introducing broker that is a member of more than one self-regulatory organization, the Commission may design and, after notice and opportunity for comment, approve a plan for those futures commission merchants, retail foreign exchange dealers, or introducing brokers that are not the subject of an approved plan (under paragraph (g) of this section), delegating to a designated self-regulatory organization the responsibilities described in paragraph (c) of this section.
[77 FR 36694, June 19, 2012]

Title 17 published on 2014-04-01

The following are only the Rules published in the Federal Register after the published date of Title 17.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2014-09-26; vol. 79 # 187 - Friday, September 26, 2014
    1. 79 FR 57767 - Exclusion of Utility Operations-Related Swaps With Utility Special Entities From De Minimis Threshold for Swaps With Special Entities
      GPO FDSys XML | Text
      COMMODITY FUTURES TRADING COMMISSION
      Final rule.
      Effective October 27, 2014.
      17 CFR Part 1

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

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United States Code
U.S. Code: Title 7 - AGRICULTURE

§ 1a - Definitions

§ 2 - Jurisdiction of Commission; liability of principal for act of agent; Commodity Futures Trading Commission; transaction in interstate commerce

§ 5 - Findings and purpose

§ 6 - Regulation of futures trading and foreign transactions

§ 6a - Excessive speculation

§ 6b - Contracts designed to defraud or mislead

§ 6c - Prohibited transactions

§ 6d - Dealing by unregistered futures commission merchants or introducing brokers prohibited; duties in handling customer...rules to avoid duplicative regulations; swap requirements; portfolio margining accounts

§ 6e - Dealings by unregistered floor trader or broker prohibited

§ 6f - Registration and financial requirements; risk assessment

§ 6g - Reporting and recordkeeping

§ 6h - False self-representation as registered entity member prohibited

§ 6i - Reports of deals equal to or in excess of trading limits; books and records; cash and controlled transactions

§ 6k - Registration of associates of futures commission merchants, commodity pool operators, and commodity trading advisors; required disclosure of disqualifications; exemptions for associated persons

7 U.S. Code § -

§ 6m - Use of mails or other means or instrumentalities of interstate commerce by commodity trading advisors and commodity pool operators; relation to other law

§ 6n - Registration of commodity trading advisors and commodity pool operators; application; expiration and renewal; record keeping and reports; disclosure; statements of account

7 U.S. Code § -

§ 6p - Standards and examinations

§ 6r - Reporting and recordkeeping for uncleared swaps

§ 6s - Registration and regulation of swap dealers and major swap participants

§ 7 - Designation of boards of trade as contract markets

§ 7a - Repealed.

7 U.S. Code § 2a to 4a - Transferred

7 U.S. Code § 2a to 4a - Transferred

§ 7b - Suspension or revocation of designation as registered entity

7 U.S. Code § 2a to 4a - Transferred

§ 8 - Application for designation as contract market or derivatives transaction execution facility; time; suspension or revocation of designation; hearing; review by court of appeals

§ 9 - Prohibition regarding manipulation and false information

§ 10 - Repealed. June 25, 1948, ch. 646,

§ 10a - Cooperative associations and corporations, exclusion from board of trade; rules of board inapplicable to payment of compensation by association

§ 12 - Public disclosure

§ 12a - Registration of commodity dealers and associated persons; regulation of registered entities

§ 12c - Disciplinary actions

§ 13a - Nonenforcement of rules of government or other violations; cease and desist orders; fines and penalties; imprisonment; misdemeanor; separate offenses

7 U.S. Code § 12–1 to 12–3 - Omitted

§ 16 - Commission operations

§ 16a - Service fees and National Futures Association study

§ 19 - Consideration of costs and benefits and antitrust laws

§ 21 - Registered futures associations

§ 23 - Standardized contracts for certain commodities

§ 24 - Customer property with respect to commodity broker debtors; definitions

Statutes at Large

Title 17 published on 2014-04-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 17 CFR 1 after this date.

  • 2014-09-26; vol. 79 # 187 - Friday, September 26, 2014
    1. 79 FR 57767 - Exclusion of Utility Operations-Related Swaps With Utility Special Entities From De Minimis Threshold for Swaps With Special Entities
      GPO FDSys XML | Text
      COMMODITY FUTURES TRADING COMMISSION
      Final rule.
      Effective October 27, 2014.
      17 CFR Part 1