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CFTC Rule 38.604

Requires designated contract markets to monitor their members’ financial condition and risk exposure to ensure compliance with capital standards and protect customer funds.

Rule Overview

Jurisdiction: United States

Regulator: CFTC

Topic: Capital Requirements

Overview
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This rule obligates designated contract markets (DCMs) to implement ongoing financial surveillance of their member firms, including futures commission merchants (FCMs) and introducing brokers (IBs).

DCMs must receive and promptly review financial reports and related data, monitor members’ and customers’ positions, and have rules in place that set minimum capital requirements.

Specifically, DCMs must continually assess the financial obligations FCMs assume through customer positions, compare those obligations to the firms’ available financial resources, and act as needed to safeguard customer funds.

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