CFTC Form 1-FR-IB Instructions - National Futures Association

material effect on the reported adjusted net capital, or on excess
adjusted net capital, must be reported in an attachment to the report
when the report is filed.
If any supplemental information has previously been reported to
the DSRO and the Commission, it need not be repeated unless a
significant change has occurred.
Readily Marketable
Where the term `ready market' (or readily marketable) is used in
the regulations, the Commission applies the same definition as that
found in SEC rule 240.15c3-1(c)(11).
(i) The term "ready market" shall include a recognized
established securities market in which there exist independent
bona fide offers to buy and sell so that a price reasonably
related to the last sales price or current bona fide competitive
bid and offer quotations can be determined for a particular
security almost instantaneously and where payment will be
received in settlement of a sale at such price within a
relatively short time conforming to trade custom.
(ii) A "ready market" shall also be deemed to exist where
securities have been accepted as collateral for a loan by a bank
as defined in section 3(a)(6) of the Securities Exchange Act of
1934 and where the [IB] demonstrates to its [regulator] that
such securities adequately secure such loans as that term
(adequately secured) is defined in [SEC rule 240.15c3-1(c)(5)].
Secured Receivables
To be considered "good" security for a receivable, collateral
must be readily marketable, otherwise unencumbered, and readily
convertible into cash. Also, the collateral must be in the possession
or control of the IB, or the IB must have a legally enforceable,
written security agreement signed by the debtor, and a perfected
security interest in the collateral.
Any securities or property held by an IB as collateral against a
receivable must be reduced by the appropriate haircut in determining
the extent to which a receivable is secured.
Warehouse receipts are good collateral if the commodity covered
by the warehouse receipt has a ready market.
The following are not good security for a receivable:
- Futures and option contracts
- Exchange memberships