FINANCIAL CRIMES ENFORCEMENT NETWORK In an August 25, 2015, press release, the Financial Crimes Enforcement Network (“FinCEN”) announced proposed anti-money laundering (“AML”) regulations for investment advisers. FinCEN has published a Notice of Proposed Rulemaking regarding AML programs and suspicious activity report (“SAR”) requirements that would apply to certain investment advisers. The purpose of FinCEN’s proposed rule is to prescribe minimal standards for AML programs to be established by certain investment advisers and to require such investment advisers to report suspicious activity to FinCEN pursuant to the Bank Secrecy Act (“BSA”). The proposed rules would apply to Securities and Exchange Commission…...

NIBA will be featuring a recurring article in its monthly newsletter to membership with a focus on FCM Risk Management. The article will feature a different Member FCM each month discussing their approach to risk management. The questions below are a guide and are not required to be answered, and questions can be added and/or removed as you see fit. We thank you in advance for your participation and look forward to bringing this feature to our membership. FCM Name: Interactive Brokers LLC CEO Name: Thomas Peterffy, Chairman & CEO Head of Risk Name: Thomas Frank, EVP & CIO and…...

Q: What is needed (checklist, step by step, guide, etc) to setup a non-trading 4.7 exempt CTA for a stand alone entity? A: “Selecting and Recommending CTAs – A Recommending CTA is one who recommends various trading advisors to clients (e.g., individuals, other CTAs or CPOs) but does not have any other authority regarding these trading CTAs.  The recommending CTA is not required to provide its own disclosure document to clients and as such is not required to provide past performance information of the clients for which it has acted as a recommending CTA.  The client should however receive the disclosure…...

Thank you again to DePaul University and to the speakers at the NIBA/DePaul co-sponsored event in Chicago. Nearly one hundred NIBA members heard sessions on meeting the challenges of marketing managed futures and updates on cybersecurity compliance before joining colleagues at a cocktail reception on the University Terrace. NIBA is in the second year of our academic partnership with DePaul University.  You can view the program in its entirety via the video links below: Session One Video Session Two Video...

NFA BYLAW 1101: APPLICATION OF NFA BYLAW 1101 IN VARIOUS COMMON SCENARIOS If you are member of the National Futures Association (“NFA”), you have probably heard that you are required to abide by NFA’s Bylaw 1101 (“Bylaw 1101”) due diligence obligations in connection with the operation of your firm.  Bylaw 1101 prohibits NFA Members (“Members”) from conducting business with or on behalf of non-NFA Members.  In this regard, NFA imposes strict liability on its Members for violations of Bylaw 1101, with enforcement cases primarily issued in instances where the NFA staff believes that the Member “knew or should have known…...

The “vanishing FCM” has recently become a hot topic. CFTC Commissioner Giancarlo gave a speech to the Market Risk Advisory Committee in June 2015, where he pointed out the dwindling number of FCMs and the concentration of customer assets in the top 5 FCMs. Reuters followed up with an article and Walt Lukken of the FIA gave an interview to the Financial Times. The common theme being the cost of regulation and increased capital requirements. There were 142 FCMs before the financial crisis in October 2008 and as of May 2015 there were only 74. On its face this represents…...

Commodity Futures Trading Commission Commodity Trading Advisors On July 23, 2015 the Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight (“DSIO”) issued press release PR7202-15 announcing the issuance of a letter that exempts certain registered commodity trading advisors (“CTAs”) will be exempted from filing Form CTA-PR. Specifically, the letter exempts CTAs that are registered but do not direct any client commodity interest accounts from filing Form CTA-PR. The letter details the exemptive relief from CFTC Regulation 4.27(c) with respect to certain registered CTAs (“Letter 15-47”). The DSIO referenced the exemptive relief already granted to commodity pool…...

As your industry advocate, the NIBA provides many services which help your business stay in compliance with NFA regulations. “Ask the NFA,” is the way you can ask questions about those regulations and compliance requirements without having to call NFA directly. Just email us at [email protected] and we will get the answers for you. Please keep in mind the purpose of this contact is to keep the lines of communication between NFA and NIBA members open, not to fix any specific individual concerns.  This month’s questions were selected from those submitted by NIBA members. The answers were supplied by NFA…...

Notice to Members I-15-18 On July 20, 2015, the Financial Crimes Enforcement Network (FinCEN) issued an advisory announcing that the Financial Action Task Force (FATF) had updated its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member FCMs and IBs should review this advisory to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/CFT deficiencies and revise their AML programs accordingly. A copy of the advisory is available on FinCEN’s website....

Until recently I was working as a field auditor with the National Futures Association (“NFA”). During my time at NFA, the self-regulator was enduring a great deal of criticism. After the failures of MF Global and PFG calls for the heads of NFA’s leadership were coming in at a frenetic pace.  While this period was no doubt painful for NFA to endure, the long hard look in the mirror they had to take as an organization became transformative. Today NFA is implementing some of the most sweeping changes to its audit approach since becoming the industry’s lead watch dog.  After…...