Board of Governors of the Federal Reserve System

Data Dictionary

Item Number B181

Call confidentiality applies to FFIEC 031/041.

Data Description:

Security and spot (cash) commodity validations as well as losses and gains in future commodity contracts shall be based upon market prices as at the date of the statement of financial condition; fractions and accrued interest with respect to securities may be omitted except where such procedure in the case of short positions would have a material effect on Net Capital.

For purposes of this report securities sold as principal under a repurchase agreement shall be deemed to be securities owned by the broker or dealer and the market value shall be included in this section. The proceeds of sale shall be included as a credit in the statement of financial condition under "Securities sold under repurchase agreements."

Joint trading and investment accounts in which the reporting broker or dealer has an interest shall be reported as follows:

(a) Accounts carried by the reporting broker or dealer - those accounts carried by the reporting broker or dealer include its applicable portion of the market value of marketable securities and spot commodities, in the appropriate item. The reporting broker or dealer's related portion of unrealized gain or loss shall be reflected in the appropriate statements. The other participant(s)' interest in the joint account shall be treated as a customer's or non-customer's account as appropriate and included as a receivable from or payable to customers or non-customers as applicable. If the other participant(s) interest is in deficit, then the same treatment given to all partly secured or unsecured customer or non-customer accounts as appropriate in the Computation of Net Capital shall apply. If the other participant(s)' equity is not sufficient to meet margin requirements and no exemption has been granted by the designated Examining Authority, the amount of cash margin deficiency shall be included as a charge in the determination of Net Capital. The other participant(s)' interest in realized gains and losses and miscellaneous income and expense items related to the joint account are not to be reflected in the reporting broker's or dealer's profit and loss accounts but should be reflected as due to or due from the other participant(s).

(b) Accounts carried by others - for those accounts carried by others, the reporting broker or dealer will include his portion of the market value of marketable securities and spot commmodities in the appropriate item. A margin deposit by the reporting broker or dealer is an allowable asset in the computation of Net Capital. The reporting broker's or dealer's portion of all realized gains and losses and miscellaneous income and expense items, related to the joint account shall be reflected in the appropriate statement with the contra being due to or from the other participants(s). The interest of other participant(s) should not be include in this report.

(c) Joint foreign and domestic arbitrage accounts in which the reporting broker or dealer has an interest - Money balances and securities positions carried by the reporting broker or dealer and by a participant shall be combined and considered on a net basis (offsetting positions in the same security shall be netted). Adjustments may be made where different clarence dates apply to transactions made on the same day in the same security.

The reporting broker's or dealer's portion of any net debit or credit balance shall be considered in determining losses or gains and in marking positions to the market. The reporting broker's or dealer's interest in any long and/or short security positions should be at market value. However, consideration should be given to setting up an appropriate reserve for any deficit in the participant's interest. The participant's share of any credit balances carried on the respondent's books for these accounts is to be included in Aggregate indebtedness.
(d) If the joint account nets to a credit balance or is a free credit balance, include "Payable to non-customers-Securities accounts" (A.I. Liabilities) the amount of such balance multiplied by the participant's percentage of the account. Any margin deposits received regarding the above would be included in "Payable to brokers or dealers and clearing organizations-Other" (A.I. Liabilities).

(e) If the joint account nets to a secured debit balance and the participant's percentage times such balance equals an amount less than the participant's margin deposit, then the difference (amount) between the two shall be included in "Payable to brokers or dealers and clearing organizations - Other" (A.I. Liabilities) and the remainder of the deposit shal be included in "Other" (Non-A.I. Liabilities). The participant's portion of the net debit balance in the joint account shall be included in "Receivables from customers or non-customers" as appropriate.

Include in the "Options" category the market value of all long listed options. The market value of all short listed options shall be included in the liability section in "Securities sold not yet purchased at market value." Unrealized gains and/or losses shall be reflected in the appropriate statement since all such positions shall be marked-to-the-market.

Regarding unlisted options, the following treatment for financial statement purposes is to be followed:

           Unlisted call options - regarding such long options include unrealized profits where the market value of the underlying security exceeds the exercise value of the respective option. For such short options, include unrealized lossses where the market value of the underlying security exceeds he exercise value of the respective option.

           Unlisted put options - regarding such long options include unrealized profits where the market value of the underlying security is less than the exercise value of the respective option. For such short options, include unrealized losses where the market value of the underlying security is less than the exercise value of the respective option.

Unrealized porfits and/or losses included in net worth on unlisted options shall be increased or decreased by the write-off of any unamortized cost of the long options or recognition of any unamortized proceeds from the writing or sale of such options. Refer to Rule 15c3-1, Appendix A, paragraph (a) for the definition of listed and unlisted options.

Positions in a broker's or dealer's (trading) error account should be marked to the market and the value of the security positions reported in the appropriate item. Positions long in suspense or difference accounts without a related money balance should not be included herein. Refer to Rule 15c3-1(c)(2)(v) as to the treatment of short security differences.

Accrued interest receivable and payable on the broker's or dealer's readily marketable securities in its accounts may be added to the market value of the respecative securities. The interest is subject to the same haircut as to the security to which it pertains.

NOTE:

Report on the Focus Report.