Series 3: Maintenance Of Minimum Net Capital Requirement

Taken from our Series 3 Online Guide Maintenance of Minimum Net Capital Requirement

Any FCM or independent introducing broker who knows or should have known that its adjusted net capital is less than the required minimum must immediately notify the CFTC and NFA or, if it is a securities broker-dealer, with the SEC and FINRA. The notification must include a discussion of how the event originated and what steps the FCM is taking to address the situation.

Introducing brokers must file their notification with the NFA and any other relevant SRO and with every futures commission merchant that carries its customer accounts. It, too, must provide information as to how the event came about and what steps it is taking to remedy it. Notification by either an FCM or IB must provide documentation that adequately reflects its capital condition on the date that its adjusted net capital fell below the minimum.

FCMs must file notice to the NFA no later than 24 hours after discovering their adjusted net capital is less than the greatest of:

150% of the minimum dollar amount of $1 million

110% of the FCM’s risk-based capital requirement

150% of adjusted net capital as required by any futures association of which it is a member

To enter into a guarantee agreement with an introducing broker, an FCM must file three successive monthly statements where its adjusted net capital equals or exceeds these amounts.

CFTC Regulation 1.12


Net Capital Requirements


National Futures Association

Futures commission merchant

Must maintain adjusted net capital equal to or greater than the greatest of the following:

$1 million

Its risk-based capital requirement

The adjusted net capital

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