2. Regulation 12 of the Futures Trading Regulations (Rg 1) (referred to in these Regulations as the principal Regulations) is amended —| (a) | by deleting paragraphs (1), (2), (3), (3A), (3B), (3C) and (4) and substituting the following paragraphs:“(1) Subject to this regulation, every futures broker shall not allow its adjusted net capital to fall for 4 consecutive weeks below the higher of $1.5 million or the sum of —| (a) | 3% of every amount of funds that a customer of the futures broker has deposited wit the futures broker which is in excess of the maintenance margins of that customer; and | | (b) | where —| (i) | the adjusted net capital of the futures broker is more than $50 million, 5% of the maintenance margins of customers and non-customers; | | (ii) | the adjusted net capital of the futures broker is not less than $15 million but not more than $50 million, 7.5% of the maintenance margins of customers and non-customers; or | | (iii) | the adjusted net capital of the futures broker is less than $15 million, 10% of maintenance margins of customers and non-customers. |
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| (2) If the adjusted net capital of a futures broker falls below the amount specified in paragraph (1), the futures broker shall immediately notify the Authority and, in the case of a futures broker which is a member of an Exchange, notify the Authority and the Exchange, that the futures broker does not comply with the financial requirements under paragraph (1). |
(3) A futures broker which is a member of an Exchange shall immediately notify the Exchange if its adjusted net capital falls below the higher of $2 million or the sum of —| (a) | 3% of every amount of funds that a customer of the futures broker has deposited with the futures broker which is in excess of the maintenance margins of that customer; and | | (b) | where —| (i) | the adjusted net capital of the futures broker is more than $50 million, 7% of the maintenance margins of customers and non-customers; | | (ii) | the adjusted net capital of the futures broker is not less than $15 million but not more than $50 million, 9% of the maintenance margins of customers and non-customers; or | | (iii) | the adjusted net capital of the futures broker is less than $15 million, 12.5% of maintenance margins of customers and non-customers. |
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(3A) Where the Authority becomes aware of or is notified by a futures broker that —| (a) | the futures broker does not comply with the financial requirements under paragraph (1); or | | (b) | the futures broker is unable to demonstrate compliance with the financial requirements under paragraph (1), |
| the Authority may direct the futures broker to immediately do any one of more of the following: |
| (i) | transfer all or any part of a customer’s futures trading and leveraged foreign exchange trading positions, margins and accounts to one or more futures brokers; | | (ii) | crease carrying on business as a futures broker until such time as it is able to demonstrate to the Authority that it complies with the financial requirements under paragraph (1), except that the futures broker may continue trading for the purposes of liquidation only or unless otherwise directed by the Authority; or | | (iii) | operate its business in such manner and on such conditions as the Authority may determine. |
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(3B) If a futures broker does not comply with the financial requirements in paragraph (3), or is unable to demonstrate compliance with such financial requirements, it shall immediately notify the Authority of that fact and if such a state of affairs continue for 5 consecutive business days or more, the Authority may issue directions requiring the futures broker to do any one or more of the following:| (a) | forthwith submit the statements prescribed in paragraph (6) to the Authority on a weekly basis, or at such regular intervals as may be determined by the Authority, until the adjusted net capital of the futures broker exceeds the amount required under paragraph (3) for 8 consecutive weeks, and thereafter the futures broker may submit the prescribed statements monthly; | | (b) | immediately cease any further increase in positions for any account carried by the futures broker; or | | (c) | transfer all or any part of a customer’s futures trading and leveraged foreign exchange trading positions, margins and accounts to one or more futures brokers if the futures broker is unable to demonstrate compliance with the financial requirements in paragraph (3) within one week from the date the futures broker failed to comply, or is unable to demonstrate compliance, with the financial requirements in paragraph (3). |
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| (3C) A futures broker shall comply with any direction issued by the Authority under paragraphs (3A) and (3B). |
| (3D) If a futures broker has failed to comply with the financial requirements in paragraph (1), but immediately demonstrates to the satisfaction of the Authority that it is able to achieve compliance with such financial requirements, the Authority may, in its discretion, allow the futures broker up to a maximum of 5 business days within which to achieve compliance before the Authority issues any direction under paragraph (3A). |
| (3E) The statements required to be submitted in paragraph (3B)(a) shall be signed by a director of the futures broker and shall be lodged with the Authority not later than one business day after the end of the weekly or other interval determined by the Authority under paragraph (3B)(a). |
(4) The Authority may, after assessing the financial condition of a futures broker, direct the futures broker to meet such additional financial or other requirements as the Authority may determine.| (b) | by deleting the word “contract” in paragraph (5)(a)(ii) and substituting the words “trading and leveraged foreign exchange trading”; | | (c) | by deleting the word “contract” in paragraph (5)(b)(i) and substituting the words “trading account and leveraged foreign exchange trading”; | | (d) | by inserting, immediately after sub-paragraph (iii) of paragraph (5)(b), the following sub-paragraph:| “(iii#a) | exclude exchange memberships;”; |
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| | (e) | by deleting the words “futures contract transactions” in the second and third lines paragraph (5)(b)(iv) and substituting the words “trading and futures contracts”; | | (f) | by deleting the word “and” at the end of sub-paragraph (iv) of paragraph (5)(b), and by inserting immediately thereafter the following sub-paragraph:| “(iii#a) | include receivables from futures brokers arising out of leveraged foreign exchange trading and from other parties; and”; |
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| | (g) | by deleting the words “a Futures Exchange” in the seventh and eighth lines of paragraph (5)(e)(i) and substituting the words “an Exchange”; | | (h) | by deleting the word “Futures” in the last line of paragraph (5)(e)(i); | | (i) | by inserting, immediately after the word “Exchange” at the end of paragraph (5)(e)(ic), the words “, and for this purpose, interest payments on the subordinated debt shall not be construed as early redemption of the subordinated debt”; | | (j) | by inserting, immediately after the words “sub-paragraphs (i)” in the first line of paragraph (5)(e)(iii), the words “, (ia), (ib), (ic), (id), (ie), (if)”; | | (k) | by deleting the words “contracts accounts belonging to customers” in the first and second lines of paragraph (5)(f)(vi) and substituting the words “trading or leveraged foreign exchange trading accounts”; | | (l) | by deleting the words “(after call)” wherever they appear in paragraph (5)(f)(vi) and substituting in each case the words “after the trade date”; | | (m) | by deleting the words “a Futures Exchange or futures market” at the end of paragraph (5)(f)(vi) and substituting the words “an Exchange, futures market or foreign exchange market”; | | (n) | by deleting sub-paragraph (vii) of paragraph (5)(f) and substituting the following sub-paragraphs:| “(vii) | the maintenance margin requirement on open futures contracts or open leveraged foreign exchange transactions held in the proprietary accounts of the futures broker which are not hedged; and | | (viii) | the total amount of money for which the futures broker is contingently liable under any security, guarantee or indemnity granted, other than a security, guarantee or indemnity granted by the futures broker for the purpose of securing, guaranteeing or indemnifying any obligation of the futures broker to —| (A) | an Exchange or clearing house; or | | (B) | another futures broker as a margin for, or to guarantee or secure, futures contracts.”; |
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| | (o) | by deleting the words “quarter” in paragraph (6)(a) and (c) and substituting in each case the word “month”; | | (p) | by deleting “30” in paragraph (6)(c) and substituting “14”; and | | (q) | by deleting paragraphs (7) and (8) and substituting the following paragraph:“(7) For the purposes of this regulation —| “customer” has the same meaning as in section 37(9) of the Act; |
“maintenance margin” means the amount of margin required to be deposited with —| (a) | an Exchange or clearing house; or | | (a) | another futures broker or person, |
| as a margin for, or to guarantee or secure, futures contracts or leveraged foreign exchange transactions, as the case may be; |
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| “non-customer” means any person, other than a customer, for whom a futures broker carries an account for trading in futures contracts or leveraged foreign exchange transactions.”. |
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| 3. The First Schedule to the principal Regulations is amended by deleting the words “Quarterly statement” at the beginning of the forty-eighth, fiftieth and fifty-second lines of the second column and substituting in each case the words “Monthly statement”. |
4. The Second Schedule to the principal Regulations is amended by deleting Forms 24, 25 and 26 and substituting the following Forms:The Futures Trading Act
(chapter 116)The Futures Trading Regulations Monthly Statement Of Financial Condition To Be Prepared By A Futures Broker |
| Name of futures broker: ____________________________________ |
| Statement of financial condition as at: _________________________ |
| | | | | 1. | Cash in banks and on hand |
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| A. | Amount segregated for customers |
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| | | | | 2. | Receivables from and margin deposits with clearing house |
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| A. | Amount segregated for customers |
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| | 3. | Receivables from futures brokers |
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| A. | Amount segregated for customers |
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| C. | Allowance for doubtful accounts |
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| | | | | | | | 4. | Receivables from customers |
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| B. | Allowance for doubtful accounts |
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| | | | | | | | 5. | Receivables from other parties |
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| A. | Amount segregated for customers |
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| C. | Allowance for doubtful accounts |
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| | | | | | | | 6. | Other receivables, advances and loans |
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| A. | Advances and loans to directors |
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| B. | Advances and loans to related corporations |
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| C. | Advances on cash commodities |
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| E. | Allowance for doubtful accounts |
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| | | | | | | | 7. | Securities segregated for customers |
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| | | | | 8. | Securities held for proprietary account |
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| | | | | 9. | Inventories of physical commodities |
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| | | | | 10. | Security deposits with clearing house |
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| | | | | | | | | 12. | Investments in related corporations and associated companies |
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| A. | Provision for diminution in value of investments |
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| | | | | | | | 13. | Fixed assets (plant, property, equipment, etc.) at net book value |
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| | | | | | | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS’ FUNDS |
| | | 17. | Bank overdrafts and bank loans payable |
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| | | 18. | Loans and advances from related corporations and associated companies |
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| | | 19. | Payables to clearing house |
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| A. | Amount segregated for customers |
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| | | 20. | Payables to futures brokers |
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| A. | Amount segregated for customers |
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| | | A. | Amount segregated for customers |
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| | | 22. | Payables to other parties |
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| A. | Amount segregated for customers |
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| | | 23. | Liabilities subordinated to claims of general creditors |
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| A. | Subject to satisfactory subordinated agreement |
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| B. | Not subject to satisfactory subordinated agreement |
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| | | 24. | Other payables and accrued liabilities |
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| | | | | 26. | Shareholders’ funds/net head office funds |
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| D. | Unrealised profit/(loss) |
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| E. | Unappropriated profit/(accumulated losses) |
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| | | 27. | Total shareholders’ funds/net head office funds |
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| | | 28. | Total liabilities and shareholders’ funds/net head office funds |
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| | | 29. | Value of company’s assets pledged |
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| A. | For obligations of the company |
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| B. | For the benefit of third parties |
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| | | 30. | Contingent liabilities |
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| A. | Guarantees in favour of SIMEX |
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| B. | Guarantees in favour of other exchanges |
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| C. | Guarantees in favour of others (to specify) |
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| D. | Commitments entered into by not booked in Company’s account |
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The Futures Trading Act
(chapter 116)The Futures Trading Regulations Monthly Statement Of Computation Of Adjusted Net Capital |
| Name of futures broker: ____________________________________ |
| Statement of computation of adjusted net capital as at: ____________ |
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| 1. | Current assets (Item 16 of Form 24) |
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| | | 2. | Less adjustments to current assets |
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| A. | Amount segregated for customers (to the extent liabilities are deducted in 5B below) |
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| | | | 3. | Net current assets (Item 1 minus Item 2) |
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| | | 4. | Total liabilities (Item 25 of Form 24) |
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| | | 5. | Less adjustments to liabilities |
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| A. | Liabilities subject to satisfactory subordinated agreement (Item 23A of Form 24) |
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| B. | Amount segregated for customers that are payable to them (Item 21A of Form 24) |
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| C. | Allowable long-term liabilities |
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| | | | | | | | | 6. | Adjusted liabilities (Item 4 minus Item 5) |
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| | | 7. | Net capital (Item 3 minus Item 5) |
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| | | 8. | Excess of value of advances paid on cash commodity contracts used in computing net capital over 95% of the market value of commodities covered by such contracts |
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| | | 9. | Excess of value of hedged inventories used in computing net capital over 95% of their market value |
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| | | 10. | Excess of value of unhedged inventories used in computing net capital over 80% of their market value |
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| | | 11. | Excess value of Government securities used in computing net capital over 100% of their market value |
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| | | 12. | Excess of value of other securities used in computing net capital over 90% of their market value |
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| | | 13. | All amount of moneys required to meet the maintenance margin/original margin (under-margined unsecured accounts) |
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| | | 14. | Relevant maintenance margin requirement for all uncovered proprietary positions |
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| | | 15. | Guarantees given by Company in favour of others (Item 30C of Form 24) |
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| | | | | 17. | Adjusted net capital (Item 7 minus Item 16) |
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| | | 18. | Required maintenance margins of customers |
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| | | 19. | Required maintenance margins of non-customers |
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| | | 20. | Total required maintenance margins (Item 18 plus Item 19) |
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| | | 21. | Amount of funds required to be segregated (Item 6 of Form 26) |
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| | | 22. | Excess customer funds (Item 21 minus Item 18) |
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| | | 23. | Adjusted net capital requirement under Regulation 12(1) (X% of Item 20 plus 3% of Item 22) |
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| | | 24. | Adjusted net capital requirement under Regulation 12(3) (Y% of Item 20 plus 3% of Item 22) |
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| | | 25. | Excess/(deficiency) in adjusted net capital under Regulations 12(1) (Item 17 minus Item 23) |
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| | | 26. | Excess/(deficiency) in adjusted net capital under Regulation 12(3) (Item 17 minus Item 24) |
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| X% equals 5% and Y% equals 7% if adjusted net capital is more than $50 million. |
| X% equals 7.5% and Y% equals 9% if adjusted net capital is not less than $15 million but not more than $50 million. |
| X% equals 10% and Y% equals 12.5% if adjusted net capital is less than $15 million. |
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The Futures Trading Act
(chapter 116)The Futures Trading Regulations Monthly Statement Of Segregation Requirement And Location Of Segregated Funds |
| Name of futures broker: ________________________________________ |
| Statement of segregation requirements and locations of segregated funds as at: ______________________________________________ |
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| 1. | Net ledger balances in accounts of customers |
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| | | 2. | Securities (at market value) belonging to customers |
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| | | 3. | Net unrealised profit/(loss) in open contracts |
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| | | 4. | Net equity of customers (Total of Item 1 to Item 3) |
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| | | | | 6. | Amount required to be segregated (Total of Item 4 and Item 5) |
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| | | Location of Segregated Funds |
| 7. | Segregated cash on hand |
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| 8. | Deposited in segregated bank accounts |
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| 9. | Segregated securities deposited by customers |
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| 10. | Receivables from and margin deposits with other parties |
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| | | 11. | Net equities with futures brokers |
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| 12. | Receivables from and margin deposits with other parties |
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| 13. | Investments in securities or other instruments |
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| 14. | Others (please specify) |
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| | | 15. | Total amount segregated (Total of Item 7 to Item 14) |
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| | | 16. | Excess/(deficiency) funds in segregation (Item 15 minus Item 6)””. |
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