Commodity Futures Trading Commission October 2005 – Federal Register Recent Federal Regulation Documents

The Commodity Futures Trading Commission (``Commission'' or ``CFTC'') is issuing this release to propose amendments to Commission rules that impose minimum financial and related reporting requirements upon each person registered as a futures commission merchant (``FCM''). Pursuant to rule amendments that became effective in August of 2004, the Securities and Exchange Commission (``SEC'') has established a method for securities brokers or dealers (``BDs'') that voluntarily elect SEC consolidated supervision for their ultimate holding companies and affiliates, and that also meet specified minimum capital and other requirements, to request approval to use internal mathematical models to determine their capital deductions for market risk and credit risk associated with their proprietary trading assets. Under the rule amendments that are proposed in this release, FCMs that are also BDs (``FCM/BDs'') would have the option, subject to the reporting and other requirements that are specified in the proposed rulemaking, of electing to compute their adjusted net capital using their SEC-approved alternative market risk and credit risk capital deductions in lieu of CFTC requirements. The Commission is also proposing other rule amendments that address confidential treatment for the reports and statements that would be required to be filed under the proposed amendments, and also to address the confidential treatment of certain other information that all FCM/BDs must file with both the Commission and the SEC. Finally, the Commission is also proposing rule amendments in this release that would amend the minimum financial requirements of FCMs and introducing brokers (``IBs'') by reducing the capital deductions for their uncovered inventory or forward contracts in specified foreign currencies. The proposed reduction is consistent with guidance currently provided by the Commission to FCMs and IBs.