INTL FCStone 2014 Annual Report Download - page 26

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INTL FCSTONE INC. Form 10K10
PART I
Segregated Customer Assets
FCStone, LLC maintains customer segregated deposits from
its customers relating to their trading of futures and options
on futures on U.S. commodities exchanges held with FCStone,
LLC, making it subject to CFTC regulation 1.20, which
specifies that such funds must be held in segregation and
not commingled with the firm’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 filing of a
daily segregation calculation which compares the assets held in
customers segregated depositories (“segregated assets”) to the
firm’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 September 30, 2014,
FCStone, LLC maintained $36.5 million 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, certificates of deposit, commercial paper
and corporate notes or bonds which are guaranteed by the U.S.
under the Temporary Liquidity Guarantee Program, interest in
money market mutual funds, and repurchase transactions with
unaffiliated entities in otherwise allowable securities. FCStone,
LLC predominately invests its customer segregated assets in U.S.
Treasury securities and money market mutual funds.
INTL FCStone Ltd is subject to certain business rules, including
those that govern the treatment of client money and other assets
which under certain circumstances for certain classes of client
must be segregated from the firm’s own assets. INTL FCStone Ltd
currently maintains segregated funds in excess of all applicable
requirements.
Secured Customer Assets
FCStone, LLC maintains customer secured deposits from its
customers funds relating to their trading of futures and options
on futures traded on, or subject to the rules of, a foreign board
of trade held with FCStone, LLC, making it subject to CFTC
Regulation 30.7, which requires that such funds must be carried
in separate accounts in an amount sufficient to satisfy all of
FCStone LLC’s current obligations to customers trading foreign
futures and foreign options on foreign commodity exchanges
or boards of trade, which are designated as secured customers’
accounts. As of September 30, 2014, FCStone, LLC maintained
$19.9 million in secured assets in excess of its secured liabilities.
Foreign Operations
We operate in a number of foreign jurisdictions, including Canada,
Ireland, the United Kingdom, Argentina, Brazil, Colombia,
Uruguay, Paraguay, Mexico, Nigeria, Dubai, China, South Korea,
Hong Kong, Australia and Singapore. We established wholly
owned subsidiaries in Mexico, Uruguay and Nigeria but do not
have offices or employees in those countries.
INTL FCStone Ltd is domiciled in the United Kingdom, and
subject to regulation by the FCA.
INTL FCStone Securities and INTL Commodities, Inc. each
have branch offices in the United Kingdom. As a result, their
activities are also subject to regulation by the FCA.
In Argentina, the activities of Gainvest S.A. Sociedad Gerente
de FCI and INTL CIBSA S.A. are subject to regulation by the
Comision Nacional de Valores and the activities of INTL Capital,
S.A. are subject to regulation by the Rosario Futures Exchange
and the General Inspector of Justice.
In Brazil, the activities of FCStone do Brasil are subject to
regulation by BM&F Bovespa, and the activities of INTL FCStone
DTVM Ltda. are regulated by the Brazilian Central Bank and
Securities and Exchange Commission of Brazil.
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 and
New Zealand Clearing Ltd.
INTL FCStone (Hong Kong) Limited holds a type 2 derivatives
license and is subject to regulation by the Securities & Futures
Commission of Hong Kong.
ITEM 1 Business