To comply with CFTC regulations and NFA Rules, FCMs and independent IBs have to compute adjusted net capital using the following calculation: Current Assets - Liabilities - Charges Against Capital = Adjusted Net Capital.

Minimum required adjusted net capital for independent IBs is equal to or the greater of

1. $45,000, or
2. For Member IBs with less than $1,000,000 in Adjusted Net Capital, $6,000 per office operated by the IB (including the main office).
3. For Member IBs with less than $1,000,000 in Adjusted Net Capital, $3,000 for each AP sponsored by the IB
4. For securities brokers and dealers, the amount of net capital required by Rule 15c3-1(a) of the Securities and Exchange Commission (17 CFR 240.15c3-1(a)).

If an IB opts not to maintain its own adjusted net capital, it may satisfy minimum financial requirements by entering into a guarantee agreement with the registered FCM that carries its accounts.

Minimum required adjusted net capital for FCMs is the greater of

1. $500,000, or
   
2. For Member FCMs with less than $2,000,000 in Adjusted Net Capital, $6,000 for each remote location operated (i.e., proprietary branch offices, main office of each guaranteed IB and branch offices of each guaranteed IB).
   
3. For Member FCMs with less than $2,000,000 in Adjusted Net Capital, $3,000 for each AP sponsored (including APs sponsored by guaranteed IBs).
4. For securities brokers and dealers, the amount of net capital specified in Rule 15c3-1(a) of the Regulations of the Securities and Exchange Commission (17 CFR 240.15c3-1(a)).
5. Eight (8) percent of domestic and foreign domiciled customer and four (4) percent of non-customer (excluding proprietary) risk maintenance margin/performance bond requirements for all domestic and foreign futures and options on futures contracts excluding the risk margin associated with naked long option positions.
6. For Member FCMs with an affiliate described in section 2(c)(2)(B)(ii)(III) of the Act that engages in off-exchange forex transactions with retail customers (as those terms are defined in Compliance Rule 2-36(h)(ii) and Compliance Rule 2-36(i)) and that is authorized to engage in those transactions solely by virtue of its affiliation with a registered FCM, $7,500,000;
7. For Member FCMs that are counterparties to off-exchange forex options transactions with retail customers (as those terms are defined in Compliance Rule 2-36(h)(ii) and Compliance Rule 2-36(i)), $5,000,000.

CFTC Regulation 1.17 defines assets and liabilities that effect a firm's net capital position. When computing net capital, an FCM or IB may exclude a liability that is subordinated to the claims of all general creditors pursuant to a satisfactory subordination agreement. A subordinated loan agreement must be filed with NFA at least ten days prior to the proposed effective date of the agreement and cannot be considered "satisfactory" until NFA finds the agreement acceptable. In order to facilitate the approval process for subordinated loan agreements ("SLA"), NFA recommends that the FCM or IB use the following templates as a guide when drafting an SLA:

• Sample cash SLA
• Sample Revolving SLA
• Sample Secured Demand Note SLA
• Sample Revolving SLA (Equity)

Form 1 FR-FCM, 1 FR-IB, FOCUS II and FOCUS IIA are used to file financial statements. FCMs must file with NFA and the CFTC monthly. IBs which aren't also securities brokers must file semi-annually. If IBs are also registered securities brokers they have to file at least quarterly. Fiscal year-end filings must be certified by independent public accountants.

NFA's Financial Requirements require that FCMs file all unaudited financial statements electronically using the Winjammer system. Certified financial statements for FCMs must be filed hardcopy with both NFA and the CFTC.

With regards to IBs, NFA's Financial Requirements require that all unaudited financial statements are filed electronically using the WinJammer or EasyFile filing systems. FOCUS II or FOCUS IIA filers must use WinJammer and 1-FR-IB filers must use EasyFile. Further, effective December 22, 2006, 1-FR-IB filers are also required to file their certified financial statement electronically using EasyFile.

Entities applying for FCM or Independent IB registration are encouraged to use WinJammer or EasyFile as applicable. You may contact NFA's Compliance Department with any questions. Applicants only may submit their initial financial statements in hard copy using the following standard forms:

• I-FR-IB (Effective date of amendments: July 31, 2006)

• I-FR-FCM (Effective date of amendments: July 31, 2006)

• FOCUS II (Effective date of amendments: July 31, 2006)

• FOCUS IIA (Effective date of amendments: July 31, 2006)

FCMs and independent IBs have certain mandatory reporting requirements once they are approved. Please see the applicable form for those requirements:

a. FCM Reporting Requirements
b. Independent IB Reporting Requirements