| The CFTC recently approved the attached rule amendments pertaining to the responsibilities of clearing members in the preparation and reporting of their financial statements. In brief, these amendments were adopted to clarify clearing member responsibilities of requiring not only the maintenance of excess capital, segregated funds, and secured funds, but also the accurate computation, recording, and reporting of such balances. In addition, please note the following significant changes: Rule 970.A.4. - FINANCIAL REQUIREMENTS The rule was clarified to require the accurate computation and recording of net capital including capital requirements. Rule 971.A.2. and 4. - SEGREGATION AND SECURED REQUIREMENTS The rule was expanded to require the accurate computation, recording, and reporting of balances in the Statement of Segregation Requirements and Funds in Segregation and the Statement of Secured Amounts and Funds Held in Separate Accounts. Further, the rule was clarified to require the preparation of complete and materially accurate daily segregation and secured amount statements. Rule 980.B. - REQUIRED RECORDS AND REPORTS A specific rule was added to require clearing members to maintain adequate accounting systems, internal accounting controls and procedures for safeguarding customer and firm assets. This requirement was further defined to include the maintenance of complete and accurate reconciliations and the timely resolution of reconciling items for all balances regardless of a clearing member's excess capital, segregation and secured position. In addition, several components of Rules 971 and 980 were reordered for better organization of similar clearing member requirements. In the attached formal rule changes, additions are underlined and deletions are lined-out and bracketed. If you have any questions, please call the Audit Department at (312) 930-3230 or e-mail us at audits@cme.com | 