INTL FCStone 2011 Annual Report Download - page 24

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INTL FCSTONE INC.Form10K10
PARTI
ITEM 1 Business
INTL Trading to make distributions to the Company. ey also
restrict the ability of INTL Trading to expand its business beyond
a certain point without the introduction of additional capital. As
of September30,2011, INTL Trading’s net capital and excess net
capital were in excess of all applicable requirements.
FCStone Australia Pty,Ltd (“FCStone Australia”) is regulated
by the Australian Securities and Investment Commission and is
subject to a surplus liquid funds requirement. FCStone Australia
is also regulated by the New Zealand Clearing Limited, and is
subject to a capital adequacy requirement.
FCC Investments,Inc., a broker-dealer subsidiary, is subject to
the net capital requirements of the SEC relating to liquidity and
net capital levels.
Risk Management Incorporated and Hencorp Futures are regulated
by the CFTC and the NFA, and are both subject to a minimum
capital requirement.
INTL FCStone (Europe) is regulated by the Financial Services
Authority, the regulator of the fi nancial services industry in
the UnitedKingdom, and subject to a consolidated net capital
requirement.
Certain other non-U.S. subsidiaries of the Company are also subject
to capital adequacy requirements promulgated by authorities of
the countries in which they operate.
All of the subsidiaries of the Company are in compliance with all
of their capital regulatory requirements as of September30,2011.
Additional information on these net capital and minimum net capital
requirements can be found within Note15 of the Consolidated
Financial Statements.
Segregated Customer Assets
FCStone,LLC maintains customer segregated deposits from its
customers to margin their positions held with the Company. As
such, it is subject to CFTC regulation1.20, which specifi es that such
funds must be held in segregation and not commingled with the
Company’s own assets. FCStone,LLC maintains acknowledgment
letters from each depository at which it maintains customer
segregated deposits in which the depository acknowledges the
nature of funds on deposit in the account. In addition, CFTC
regulations require that a daily segregation calculation is performed
which compares the assets held in customers segregated depositories
(“segregated assets”) to the Company’s total segregated assets
held on deposit from customers (“segregated liabilities”). e
amount of customer segregated assets must be in excess of the
segregated liabilities owed to customers and any shortfall in such
assets must be immediately communicated to the CFTC. As of
September30,2011, FCStone,LLC maintained $50.9million
in segregated assets in excess of its segregated liabilities.
In addition, FCStone,LLC is subject to CFTC regulation 1.25,
which governs the acceptable investment of customer segregated
assets. is regulation allows for the investment of customer
segregated assets in readily marketable instruments including U.S.
Treasury securities, municipal securities, government sponsored
enterprise securities, certifi cates of deposit, commercial paper,
corporate notes or bonds, general obligations of a sovereign
nation, interest in money market mutual funds, and repurchase
transactions with affi liated entities in otherwise allowable securities.
FCStone,LLC predominately invests its customer segregated assets
in U.S. Treasury bills and money market mutual funds, maintains
no investment in the general obligations of a sovereign nation and
does not engage in repurchase transactions with affi liated entities.
Foreign Operations
e Company operates in a number of foreign jurisdictions, including
Canada, Ireland, the UnitedKingdom, Argentina, Brazil, Uruguay,
Paraguay, Mexico, Nigeria, Dubai, China, Australia and Singapore.
INTL has established wholly-owned subsidiaries in Mexico and
Nigeria but does not have offi ces or employees in those countries.
FCStone Commodity Services (Europe)Ltd. is domiciled in Ireland
and subject to regulation by the Financial Regulator of Ireland.
INTL FCStone (Europe) is domiciled in the UnitedKingdom, and
subject to regulation by the UnitedKingdom Financial Services
Authority.
INTL Trading, INTL FCStone (Europe) and INTL
Commodities,Inc. each have branch offi ces in the UnitedKingdom.
As a result, their activities are also subject to regulation by the
UnitedKingdom Financial Services Authority.
In Argentina, the activities of INTL Gainvest and Compania
Inversora BursatilS.A. Sociedad de Bolsa (“CIBSA”) are subject
to regulation by the Comision de Valores and Merval.
In Brazil, the activities of FCStone do Brasil are subject to regulation
by BM&FBovespa.
e activities of INTL Commodities DMCC are subject to regulation
by the Dubai Multi Commodities Centre.
FCStone Australia Pty. Ltd. is subject to regulation by the Australian
Securities and Investments Commission.