FAQ: Non-Member Broker Intermediary Tiered Credit Account Structure

  • 5 Oct 2016
  • By CME Group
  • Topics: Credit

1. What CME venues should a Non-Member Broker Intermediary account be enabled for?

The account will be enabled for ClearPort Clearing.

2. Where can I register for ClearPort?

An authorized representative of the user (individual, clearing firm, brokerage firm, trading firm) must complete and submit the registration form to receive access to CME ClearPort clearing services. http://www.cmegroup.com/clearport/registration.html.

3. What is a CME Group Login?

CME Group Login is a self-managed, centralized user profile service that authenticates access to CME Group applications and services. http://www.cmegroup.com/login.

4. Where is the Account Manager user manual located?

5. How do I create and how do I access a Non-Member Broker Intermediary Account after creating?

FCMs steps on how to create a Non-Member Broker Intermediary account.

Non-Member Broker Intermediaries steps on how to manage a dedicated Non-Member Broker Intermediaries account.

6. Will Clearing Members (CM) have visibility of sub accounts under the Non-Member Broker Intermediary Account Structure?

Sub accounts set up by a Non-Member Broker Intermediary will not be visible to FCM

7. What should the account description be?

The account description is a field to help define accounts when searching for them.

8. How do I register on behalf of a Firm for ClearPort?

Non-Member Broker Intermediaries can register for ClearPort on behalf of customers. An FCM will not be eligible to register on behalf of an NCM as an NCM will be required to be fully registered for ClearPort. Visit cmegroup.com/clearport  for  more  information.

9. Who manages credit of the sub accounts under a Non-Member Broker Intermediary Account Structure?

The credit limit for the sub accounts is set by the Non- Member Broker Intermediary. The total credit utilization across sub accounts cannot exceed the credit limit set by the FCM.

10. At point of execution, what level of credit controls are evaluated?

Credit controls are evaluated at the trading sub account, clearing account, and clearing firm level. If credit check does not pass at any level, the trade will not be permitted.

11. What account settings will sub accounts inherit from a Non-Member Broker Intermediary Account?

Seg Type, CTI Code, Market Permissions and Product Permissions

12. How are Brokers permissioned for a Non-Member Broker Intermediary Account?

Brokers are assigned at the Non-Member Broker Intermediary account level by the FCM account manager. Account managers can add, edit, and delete brokers permissioned to both master and sub accounts.

Brokers are not inherited from the master account. Trade administrators must enable brokers for sub accounts.

Only brokers permissioned for the master account will be available for the sub account.

13. What limitations are there on Non-Member Broker Intermediary account naming convention?

Limitation of Trading sub account number – The account number must be less than 20 characters long and cannot include the following special characters: @%^&()_={} []|\’”<>,.

14. How do I set position limits on individual products at the Non-Member Broker Intermediary account level?

All product position limits are defaulted to zero, and can be set to unlimited with the use of the toggle button.

Limits can be adjusted for individual products by changing the Max Long/Short quantity.

15. How do I prevent a customer from trading specific products?

Additional credit controls can be placed on individual products by the Non-Member Broker Intermediary for sub accounts. To prevent a specific product from being traded set the max long/short quantity equal to zero.

This applies to both Non-Member Broker Intermediary and sub accounts.

16. Can I add additional products at the sub account level if they are not permissioned by the FCM?

No, only products permissioned by the FCM for the Non-

Member Broker Intermediary account will be allowed for execution at the sub account level. If a sub account customer is requesting to trade a specific product that

isn’t permissioned, the Non-Member Broker Intermediary will need to work with their FCM to add the corresponding product and credit limits.

17. Can multiple accounts be migrated to Non-Member Broker Intermediary account structure at once?

Yes, you can use the account migration template. Please contact EASE via ease.atyourservice@cmegroup.com to complete.

18. What account will be sent to FEC for post trade flow?

Currently only the master account is passed to clearing; there is a supplemental file available with sub accounts to be referenced that can be provided upon request to the clearing member.

19. How does a Non-Member Broker Intermediary manage multiple sub accounts across multiple entities?

A Non-Member Broker Intermediary administrator gets permissioned as a “Trader Risk Admin” for Account Manager with a scope of trading firm. This enables the user to manage sub accounts for all clearing accounts that are owned by their trading firm, irrespective of the actual clearer. They can search for all accounts owned by their firm across one or all clearers by clicking on the account, and simply add/edit/delete sub accounts.

20. Can trading firms get a read-only version of account manager to view sub accounts and settings?

Yes. This is the “Trader Admin” role for Account Manager as opposed to “Trader Risk Admin”. This enables the user to view sub accounts for all clearing accounts that are owned by their trading firm, as well as add/remove broker firms to/from the parent account.

21. What is the Gross Margin for Non-Member Broker Intermediary account structure?

For Customer Gross Margining, the calculation of  the margin requirement for a Non-Member Broker Intermediary account will follow long-established practices. Normal portfolio margin requirements are

calculated for each disclosed subaccount. The remaining non-disclosed positions are considered “naked”, and are margined without recognizing any risk offsets. The total requirement for the Non-Member Broker Intermediary account, then, is the sum of the portfolio requirements for the disclosed sub accounts, and the naked requirements for the non-disclosed positions.

To receive risk offsets within Non-Member Broker Intermediaries accounts, position data for sub accounts must be provided along with the Non-Member Broker Intermediary account information in the CGM file

Two examples below:

1. If FCM SENDS disclosed accounts on the CGM file:

Account

Long

Short

A

50

50

B

100

0

C

0

25

A = no margin calculated

B = charged on the 100 long C = charged on the 25 short

 

2. If FCM DOES NOT send breakdown of account in CGM file:

Account

Long

Short

NCM Acct

150

75

Non-Member Broker Intermediary account margin charged naked on both the 150 long and 75 short


WARNING – Each of Board of Trade of the City of Chicago, Inc, Chicago Mercantile Exchange Inc and New York Mercantile Exchange Inc is regulated as a recognised market operator under the Securities and Futures Act. Save as aforesaid, none of the CME Group entities are licensed to carry on regulated activities under the Securities and Futures Act in Singapore or providing financial advisory services under    the Financial Advisers Act in Singapore. This document is for distribution in Singapore solely to persons holding a capital markets services licence or exempt from such requirement, under the Securities and Futures Act. The contents of this document have not been reviewed by any regulatory authority in Singapore. You are advised to exercise caution in relation to the information contained therein. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

PM1919/00/0916

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