• Capital and Notification Requirements for Bank Clearing Members

      • To
      • Chief Executive Officers, Chief Compliance Officers, Chief Financial Officers
      • From
      • Audit Department, Clearing House Division
      • #
      • AIB 11-03
      • Notice Date
      • 25 April 2011
      • Effective Date
      • 01 May 2011
    •   Audit Information Bulletin
      To:                  Chief Executive Officers                                                                               #11-03
                              Chief Compliance Officers
                              Chief Financial Officers
      From:            Audit Department, Clearing House Division

      Date:             April 25, 2011
      Subject:      Capital and Notification Requirements for Bank Clearing Members
      Chicago Mercantile Exchange Inc. (“CME”), Chicago Board of Trade, Inc. (“CBOT”), New York Mercantile Exchange, Inc. (“NYMEX”) and Commodity Exchange, Inc. (“COMEX”) (collectively, “Exchanges”) have recently amended Rule 970 (“Financial Requirements”) and Rule 972 (“Reduction in Capital”) to establish the capital and notification requirements of banks which are clearing members of the Exchanges. These rule changes will be effective May 1, 2011. 
      As adopted, banks which are clearing members of CME, CBOT, NYMEX and/or COMEX for their own proprietary and/or affiliate trading activity of Exchange traded products must maintain Tier I Capital (as defined in accordance with the regulation applicable to the bank) of at least $5 billion. In addition, a bank clearing member is required to notify the Exchanges if its Tier I Capital decreases by more than 20% from the Tier I Capital most recently reported to the Exchanges. 
      A bank clearing member must meet all other clearing membership requirements including general requirements, guaranty fund deposits, notifications, and having the necessary clearing operational systems, controls and procedures, including risk management, in place to conduct clearing operations. The financial reporting requirements of bank clearing members will be identical to those of banks which are OTC Derivatives Clearing Members. Bank clearing members are not eligible to clear customer activity unless they are registered as Futures Commission Merchants.

      If you have any questions, please contact the Audit Department at (312) 930-3230.