• Daily Segregated, Secured 30.7 and Sequestered Statements

      • To
      • Chief Executive Officer, Chief Compliance Officer, Chief Financial Officer
      • From
      • Audit Department, Clearing House Division
      • #
      • 01
      • Notice Date
      • 24 May 2012
      • Effective Date
      • 24 May 2012
    •  
      In accordance with CME’s Audit Information Bulletin #12-04, dated April 2, 2012, (http://www.cmegroup.com/tools-information/lookups/advisories/clearing/AIB12-04.html) and NFA Financial Requirements Section 8 (http://www.nfa.futures.org/nfamanual/NFAManual.aspx?RuleID=SECTION%208&Section=7 and http://www.nfa.futures.org/NFA-compliance/NFA-futures-commission-merchants/fcm-reporting.pdf ) CME and NFA require FCMs to submit daily segregated, secured 30.7 and sequestered statements, as applicable, through WinJammer™ by 12:00 noon on the following business day. 
       
      All FCM clearing members of CME must file with CME’s Audit Department and all FCMs for which the NFA is the designated self-regulatory organization (“DSRO”) must file with NFA. These daily statements must be electronically submitted and signed off by the firm’s Chief Executive Officer, Chief Financial Officer or their designated representative as allowed under self-regulatory organization (“SRO”) requirements. 
       
      Recently CME and NFA have received several inquiries regarding the daily reporting requirements as they apply to the FCM community. Specifically:
       
      1.    When are daily statements required to be prepared and submitted on U.S. and non-U.S. holidays?
       
      A daily segregated, secured 30.7 and sequestered statement is required to be prepared for any day for which the markets are open which are relevant to that particular statement (customer origin). Further all daily statements are required to be submitted by 12:00 noon on the following U.S. business day.
       
      For example, Monday May 28, 2012 is recognized as a holiday (Memorial Day) in the United States and U.S. futures markets are closed for trading on that day. However, foreign markets are open for trading. As a result:
       
      ·         Daily segregated, secured 30.7 and sequestered statements, as applicable, for Friday May 25, 2012 are required to be submitted by 12:00 noon on Tuesday May 29, 2012.
       
      ·         Daily secured 30.7 and sequestered statements, as applicable, for Monday May 28, 2012 must be prepared and are required to be submitted by 12:00 noon on Tuesday May 29, 2012.
       
      As all the daily forms are contained in one statement in WinJammer, whenever a daily segregated, secured 30.7 and/or sequestered statement, as applicable, is required to be submitted you must submit the most recent information for all required statements. Therefore, in the example above, when submitting the daily secured 30.7 and sequestered statements, as applicable, for Monday May 28, 2012 you will need to include a segregated statement reflecting May 25, 2012 balances (the most recent balances) in the May 28th WinJammer filing to be submitted by 12:00 noon on Tuesday May 29th.
       
      2.    If an error is discovered in a daily statement which has been submitted and the error has an immaterial or no effect on excess funds, must a daily statement be re-filed? When must a daily statement be re-filed?
       
      A daily statement does not have to be re-filed if an error is discovered which has an immaterial or no effect on excess funds. 
       
      Daily segregated, secured 30.7 and sequestered statements should be complete and materially accurate. If a material error is found in the daily statements submitted subsequent to their filing, the daily statements should be immediately corrected and re-filed through WinJammer. 
       
      A material error is defined by CFTC Interpretation 4-1 as a misstatement of any individual financial statement account balance, i.e. line item, where the amount of the individual adjustment, if made to the financial statements, would cause a change of 10% or more in excess segregated funds, excess secured 30.7 funds or excess sequestered funds; or excess net capital or fall into an early warning position.
       
      3.    How should I file if there are system issues with my internal systems and/or the WinJammer site?
       
      If system issues arise with your internal systems or with the WinJammer application prior to the 12:00 noon deadline for daily statement submissions, please send a hard copy of your daily statements via e-mail to:
       
      For CME – wjammer@cme.com prior to the noon deadline.
       
      For NFA – WinJammerHelp@nfa.futures.org prior to the noon deadline.
       
       
      If you have any questions, please contact CME’s Audit Department at (312) 930‑3230 or NFA’s Information Center at (800) 621-3570.