Financial and Regulatory Surveillance
Get insights on processes and policies we use to manage risk and how we work with clearing members.
Overview
The Financial and Regulatory Surveillance Department monitors the capital requirements of clearing members based on the risk associated with the positions of each clearing member. We also continuously assess clearing members' internal controls, risk-management policies, and back-office operations to identify potential issues and promote resilience.
resources
Financial Surveillance Programs
Learn about our three-pronged approach to managing risk and ensuring integrity.
Reporting
Clearing members must calculate segregation requirements and ensure compliance with CFTC and exchange capital requirements on a daily basis.
requirements
- Report the segregation, secured 30.7, and customer cleared swaps statements daily. Depositories must independently verify the FCM’s customer balances.
- Report details concerning investments of customer funds bi-monthly
- Submit full financial statements monthly
- Provide audited financial statements annually
- Make more frequent reports as directed
Notification
Clearing members are required to report any failure to meet segregation or minimum capital requirements.
requirements
Clearing members must notify the Financial and Regulatory Surveillance Department prior to:
- Any significant business transaction
- A significant change in operations
Inspection
Clearing members generally are subject to a financial and operational risk-based examination every year.
requirements
These examinations are:
- Tailored to the specific risks of the clearing member
- Conducted in accordance with the JAC examination program
- Performed on a surprise basis
Joint Audit Committee
The Joint Audit Committee (JAC), composed of U.S. futures exchanges, is a representative committee of the Audit and Financial Surveillance departments of exchanges and regulatory organizations.
Enhancing and Assisting U.S. Futures Exchanges
Customer protection and the financial integrity of the exchanges/clearing organizations are the foremost goals to be achieved through the review of futures commission merchants (FCMs). These goals are achieved by monitoring and enforcing Commodity Futures Trading Commission (CFTC) regulations and exchange rules covering minimum financial, segregation, secured and customer cleared swap, recordkeeping, and reporting requirements.
Lessening the Regulatory Burden
The CFTC has oversight responsibility of the U.S. commodity industry. The exchanges and National Futures Association (NFA) have primary responsibility for ensuring market participants are adhering to rules and regulations. The Joint Audit Committee (JAC) was formed to enhance uniformity among participants as well as lessen the regulatory burden for FCMs that are members of multiple exchanges.
Reducing Regulatory Duplication
To ensure the financial integrity of its clearing members, CME Group participates in the JAC – a representative committee of the Financial Surveillance departments of U.S. futures exchanges and regulatory organizations. Because many clearing members are members of other exchanges, the JAC assigns a "lead regulator" to common members to reduce regulatory duplication. The lead regulator, or Designated-Self Regulatory Organization (DSRO), is primarily responsible for the financial surveillance of its allocated members.
Examining Exchange Customer Protections
The DSRO will perform a risk-based examination upon its allocated members, designed to protect customers and ensure exchange financial integrity. Such examinations are conducted in accordance with the JAC Examination Program, which is reviewed by the CFTC. The CFTC may, at its discretion, perform its own examination of an FCM.
Financial and Regulatory Surveillance Forms
Fill out any paperwork you need to get started and follow instructions as needed. Contact us if you have questions.
Clearing
CME Clearing serves as the neutral counterparty to every futures, option, and OTC trade, ensuring market integrity and reducing risk. Learn about the integral role we play in the global marketplace.
Margin Services
Get insight on the institution-grade tools we use to reduce bilateral counterparty credit risk and free up trading capital, optimizing margin efficiency.
Risk Management
We offer a comprehensive set of sophisticated tools and safeguards to protect customers and clearing firms and maintain market integrity.
Connect with an expert
We’re here to help you. For more information or assistance, contact the Clearing support team and we’ll get back to you as soon as possible.
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