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PFGBEST Customer Segregated
Funds Statement
FDIC and segregation
reporting are two different
regulatory structures.
JP Morgan and the FDIC
do not insure the customer’s
account. The Commodity
Futures Trading Commission
(CFTC) uses a structure
for futures called segregation.
The customer's funds
are segregated from
the firm's operating
income. The firm
also must add even more
money (about 7%) of
the customers money
to protect the customer’s
segregated accounts.
This is different than
in the banking industry
where banks use the
customer's money to
make loans to other
customers.
PFGBEST takes its responsibility
to protect customer
funds very seriously.
Futures customer funds
are segregated in accordance
with the Commodity Exchange
Act. Simply, what this
means is that the funds
and U.S. treasuries
you deposit with PFG
BEST to trade commodity
futures and options
are kept segregated
and are not subject
to any offset, indebtedness,
obligation or liabilities
of PFGBEST. In other
words, customer funds
cannot be commingled
with the operating funds
of PFGBEST. As a registered
futures commission merchant
(FCM) with the CFTC
and member of the National
Futures Association
(NFA), PFGBEST is subject
to daily segregation
reporting, monthly financial
reporting and yearly
financial audits. Specifically,
PFGBEST must make a
formal daily segregation
computation detailing
the amount of customer
funds required to be
on deposit in segregated
accounts. This report
must be filed with NFA
on a daily basis. An
NFA audit includes the
review of all segregated
accounts to ensure the
safety of your funds
on deposit with PFGBEST.
PFGBEST and FCM's are
required to file monthly
reports with the CFTC,
in addition to the above
mentioned reporting
guidelines. Information
regarding each registered
FCM is then made available
for public review on
the CFTC website.
CFTC Website:
Financial Data For FCMs
CFTC Regulation 1.20,
outlines that PFGBEST
segregate customer funds
for futures trading.
PFGBEST is not allowed
to state forex funds
are segregated as segregated
funds get special treatment
in the event of bankruptcy.
PFGBEST does keep forex
customer funds separate
from PFGBEST operating
funds.
Regulation 1.20 has
been provided below
for your review.
§ 1.20 Customer
funds to be segregated
and separately accounted
for.
(a) All customer funds
shall be separately
accounted for and segregated
as belonging to commodity
or option customers.
Such customer funds
when deposited with
any bank, trust company,
clearing organization
or another futures commission
merchant shall be deposited
under an account name
which clearly identifies
them as such and shows
that they are segregated
as required by the Act
and this part. Each
registrant shall obtain
and retain in its files
for the period provided
in §1.31 a written acknowledgment
from such bank, trust
company, clearing organization,
or futures commission
merchant, that it was
informed that the customer
funds deposited therein
are those of commodity
or option customers
and are being held in
accordance with the
provisions of the Act
and this part: Provided,
however, that an acknowledgment
need not be obtained
from a clearing organization
that has adopted and
submitted to the Commission
rules that provide for
the segregation as customer
funds, in accordance
with all relevant provisions
of the Act and the rules
and orders promulgated
thereunder, of all funds
held on behalf of customers.
Under no circumstances
shall any portion of
customer funds be obligated
to a clearing organization,
any member of a contract
market, a futures commission
merchant, or any depository
except to purchase,
margin, guarantee, secure,
transfer, adjust or
settle trades, contracts
or commodity option
transactions of commodity
or option customers.
No person, including
any clearing organization
or any depository, that
has received customer
funds for deposit in
a segregated account,
as provided in this
section, may hold, dispose
of, or use any such
funds as belonging to
any person other than
the option or commodity
customers of the futures
commission merchant
which deposited such
funds.
(b) All customer funds
received by a clearing
organization from a
member of the clearing
organization to purchase,
margin, guarantee, secure
or settle the trades,
contracts or commodity
options of the clearing
member's commodity or
option customers and
all money accruing to
such commodity or option
customers as the result
of trades, contracts
or commodity options
so carried shall be
separately accounted
for and segregated as
belonging to such commodity
or option customers,
and a clearing organization
shall not hold, use
or dispose of such customer
funds except as belonging
to such commodity or
option customers. Such
customer funds when
deposited in a bank
or trust company shall
be deposited under an
account name which clearly
shows that they are
the customer funds of
the commodity or option
customers of clearing
members, segregated
as required by the Act
and these regulations.
The clearing organization
shall obtain and retain
in its files for the
period provided by §1.31
an acknowledgment from
such bank or trust company
that it was informed
that the customer funds
deposited therein are
those of commodity or
option customers of
its clearing members
and are being held in
accordance with the
provisions of the Act
and these regulations.
(c) Each futures commission
merchant shall treat
and deal with the customer
funds of a commodity
customer or of an option
customer as belonging
to such commodity or
option customer. All
customer funds shall
be separately accounted
for, and shall not be
commingled with the
money, securities or
property of a futures
commission merchant
or of any other person,
or be used to secure
or guarantee the trades,
contracts or commodity
options, or to secure
or extend the credit,
of any person other
than the one for whom
the same are held: Provided,
however, That customer
funds treated as belonging
to the commodity or
option customers of
a futures commission
merchant may for convenience
be commingled and deposited
in the same account
or accounts with any
bank or trust company,
with another person
registered as a futures
commission merchant,
or with a clearing organization,
and that such share
thereof as in the normal
course of business is
necessary to purchase,
margin, guarantee, secure,
transfer, adjust, or
settle the trades, contracts
or commodity options
of such commodity or
option customers or
resulting market positions,
with the clearing organization
or with any other person
registered as a futures
commission merchant,
may be withdrawn and
applied to such purposes,
including the payment
of premiums to option
grantors, commissions,
brokerage, interest,
taxes, storage and other
fees and charges, lawfully
accruing in connection
with such trades, contracts
or commodity options:
Provided, further, That
customer funds may be
invested in instruments
described in §1.25.
(Approved by the Office
of Management and Budget
under control numbers
3038–0007, and 3038–0024)
[46 FR 54518, Nov. 3,
1981, as amended at
46 FR 63035, Dec. 30,
1981; 50 FR 36051, Sept.
5, 1985; 65 FR 78009,
Dec. 13, 2000]
