Net Capital Requirements
"Risk margin" is the level of maintenance margin an FCM must collect, and this varies by exchange. Under rules established by the CFTC in 2004, an FCM must maintain adjusted net capital in the minimum amount equal to
  1. $250,000, or
  2. 8% of the total risk margin for all positions carried in customer accounts, plus 4% of the total risk margin for all positions carried by the FCM on its own account, whichever is greater.
If the FCM is registered as a broker-dealer, the amount required under Securities and Exchange Commission regulations would constitute the net capital requirement if it exceeds either of the CFTC standards.

All exchanges accept U.S. Dollars as margin. If an FCM accepts foreign currencies to margin a domestic futures contract, a "subordination agreement" must be obtained from the account owner. This subordination agreement is required for all customers trading U.S., regardless of what country they call home. For accounts holding multiple exchange positions, firms should ensure that the specific instruments being used for margin are allowed under exchange rules.

Each FCM must file financial reports with NFA for each month-end, including its fiscal year end, within 17 business days of the date for which the report is prepared.

Independent IBs must maintain net capital of the greatest of:

  1. $45,000, or
  2. $6,000/office for IBs with less than $1,000,000 in net capital; or
  3. $3,000/AP sponsored for IBs with less than $1,000,000 in net capital.
If the IB is registered as a broker-dealer, the amount required under Securities and Exchange Commission regulations would constitute the net capital requirement if it exceeds any of the CFTC standards.

Each independent IB must file financial reports with the NFA semi-annually, including its fiscal year end, within 17 business days of the date for which the report is prepared. Independent IBs must file financial reports electronically.

An FCM receiving a margined customer's order must immediately prepare a written record of the order, including the account identification and order number, documenting by time-stamp the date and time, to the nearest minute, the order was received.

Customer Complaints

Related Articles
  1. Trading

    Brokerage Reviews: TradeStation Vs. Interactive Brokers

    These are among the most sophisticated brokers in the industry in terms of investment offerings, market access and technology.
  2. Financial Advisor

    Understanding the Maintenance Margin

    A maintenance margin is the minimum amount of equity that must be kept in a margin account.
  3. Trading

    Broker Summary: Interactive Brokers

    Learn more about IB, an online broker specializing in routing orders and executing and processing trades on more than 90 electronic exchanges and trading venues worldwide.
Frequently Asked Questions
  1. Why Do a Reverse Merger Instead of an IPO?

    Reverse mergers are often the most cost-efficient way for private companies to trade publicly.
  2. Determining a Firm's Percentage of Credit Sales

    Find out where to look for information about determining a company's percentage of credit sales.
  3. What Does the Diluted Share Price Reveal?

    Learn how diluted share price affects earnings and the company's overall financial performance.
  4. How Can Institutional Holdings Be More Than 100%?

    No entity can own more than 100% of a company's outstanding shares, but it can be reported that way.
Trading Center