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CUSTOMER PROTECTION

How U.S. Regulations Protect Your Funds

Pursuant to the Commodity Exchange Act and Commodity Futures Trading Commission (CFTC) regulations, Rosenthal Collins Group LLC (RCG), a Futures Commission Merchant (FCM), is required to treat all customers' money, securities and other property received to margin, guarantee or secure futures or options trades as customer property. RCG is also required to account separately for and segregate customer money, securities and property and not to commingle those assets with RCG's own operating assets. Customers' segregated assets cannot be used to margin any other person's trades. These segregation requirements apply to futures and options trades on exchanges located in the United States.

How RCG Helps Protect Your Funds

In compliance with segregation requirements, RCG does the following:

  • Customer funds are maintained at banks in clearly identified "segregated funds" accounts separate and apart from any other funds of RCG.
  • Each bank signs a written acknowledgment that (i) the segregated funds are held in the account in accordance with the Commodity Exchange Act and CFTC regulations, and (ii) the bank will not hold, dispose of, or use any of the segregated assets for anyone, including RCG, other than the RCG customers.
  • The assets of one customer at RCG are not used to purchase, margin or settle the trades or positions, or to secure or extend credit, of any other customer.
  • RCG will invest segregated assets only in funds guaranteed by the United States or other allowed instruments. Investments may include U.S. Treasury securities, municipal securities, government sponsored agency securities, certificates of deposit or money market mutual funds.
  • Segregated assets are only invested through, or deposited in, customer segregated funds accounts.
  • RCG keeps a "real time" record of customer segregated funds and assets.
  • Every business day, the total amount of customer assets required to be segregated and the total amount of assets actually deposited in segregated accounts is calculated as of the close of the previous business day.
Funds of Customers Trading on Foreign Exchanges

CFTC Regulations also require RCG to maintain separate accounts, funds and assets sufficient to satisfy all of its current obligations to customers trading futures and options on foreign exchanges. FCMs, such as RCG, may not commingle set-aside funds1 with their own or their proprietary or noncustomer funds or accounts. Additionally, RCG cannot hold or commingle set-aside funds with those of customers trading on U.S. exchanges.

How RCG Helps Protect Funds of Customers Trading on Foreign Commodity Exchanges

RCG maintains set-aside funds in accounts identified as such, as required by CFTC Regulations. Each bank signs a written statement that acknowledges the bank understands of the nature of the funds in the account. As of the close of each business day, RCG computes its total set-aside funds, the secured amount1, and the set-aside funds' excess or deficiency. RCG maintains set-aside funds with the following:
  • Banks located in the United States
  • FCMs registered with the CFTC
  • Foreign banks designated or recognized by the CFTC as acceptable depositories for set-aside funds
  • Clearing organizations of foreign boards of trade
  • Members of foreign boards of trade
In general, a bank or trust company located outside the United States, whose commercial paper or long-term debt is rated in one of the two highest rating categories by Standard & Poor's Corporation or Moody's Investors Service, Inc., is recognized by the CFTC as an acceptable depository for set-aside funds. Since the secured amount at all times must be liquid and sufficient to cover all obligations to its customers trading on foreign markets, RCG invests those funds consistent with that requirement.

Regulatory Enforcement

The CFTC has consistently taken a stringent enforcement approach to its regulations requiring FCMs, such as RCG, to segregate customers' assets. RCG's compliance with the CFTC's segregation and related recordkeeping rules is monitored, not only by the CFTC, but also by the "self-regulatory organizations" (e.g. the Chicago Mercantile Exchange) to which ongoing examination and surveillance of RCG's compliance is delegated. Enforcement penalties resulting from violations of these requirements may be quite severe.