The closure of the government for several weeks did not stop the progress on new rules being discussed and implemented by the CFTC. As the IBs focus on building his/her business and serving customers’ needs, the regulatory responsibilities ramp up. The Commodity Futures Trading Commission (CFTC) is working on capital requirement adjustments for FCMs which could impact margin requirements and ultimately the amount of money customers will need per contract. The CFTC Rule 1.35(a) taping rule comes into effect on December 21, 2013. If you are an IB and fall under the guidelines set by CFTC, it is very important…...

A new oral communications recordkeeping requirement was one of the key topics discussed at the 2013 NIBA Conference in Chicago on September 18, 2013.  Covered registrants must comply by December 21, 2013, unless they obtain an extension.  A recap of the Legal Panel discussion on the new recording requirements follows for the benefit of those not in attendance.  Covered Oral Communications  The Commodity Futures Trading Commission amended Regulation 1.35(a) to require futures commission merchants (FCMs), large introducing brokers (IBs), retail foreign exchange dealers (RFEDs), and certain other registrants to record oral communications that lead to the execution of a transaction…...

CFTC, FinCEN and Treasury have provided guidance in a Q&A format regarding certain unique circumstances relating to IBs and the Customer Identification Program (CIP).  These include: New Co-Owner of Account: If a person becomes a co-owner of an existing account, then the new co-owner is a customer to which the IB must perform the CIP. Rural Customer Without Address: If a customer lives in a rural area and does not have a residential or business address, then the IB may get the number on a roadside mailbox on a route route.  A route route is a description of the approximate…...

Futures-market users and regulators testified before the House Agriculture Subcommittee on General Farm Commodities and Risk Management that some parts of a proposal from the Commodity Futures Trading Commission would hurt members of the agricultural community. “We must examine if the costs outweigh the benefits,” said subcommittee Chairman Mike Conaway, R-Texas. “Farmers and ranchers who are supposed to be protected by this rule have expressed deep skepticism of it, which I share.” To view the full article go to www.agri-pulse.com...

It goes without saying that the safety of customer funds and information is critical in the futures industry. In recent years, NFA has taken significant steps to enhance customer protection. However, there are other serious threats to customer funds and personal information that aren’t as outwardly visible or frequently publicly discussed: cyber attacks. Read the full article here on the National Futures Association’s website....

CFTC Regulation 1.73 affects IBs and FCMs that execute orders for customers. Thus IBs who execute give-up orders must adopt risk management procedures. This new regulation also applies to bunched orders. During the Legal Update panel at the NIBA conference on September 18th, we will be discussing how new regulations, including 1.73 affect IBs, FCMs, Swap Firms as well as other NFA Members. About the Author Michael Coglianese CPA, P.C. has been providing compliance, auditing, and accounting services for the futures industry for over 25 years. Mike can be reached directly at 630-351-8942 or via email [email protected]. Visit www.cogcpa.com for…...

As one of four NFA Board Members representing CTAs and CPOs, I’m working to represent the interests of a broad spectrum of money managers and traders. But just who are these constituents and what are their interests? The answer is not simple and increasingly a moving target. That is because the population of CTA/CPO member firms is rising exponentially. In 2012, the CFTC rescinded a widely held exemption for certain commodity pools. In addition, the CFTC broadened the the definitions of CTAs and CPOs to include swaps. As of the first quarter of 2013, those changes yielded over 1,100 new…...

Most of the work I have been doing on the NFA board thus far has been trying to open the eyes of fellow board members and senior NFA staff to issues that affect the IB community. Issues such as no accountability following MF Global and PFG, inexperienced auditors, the inconsistent promotional material review process, the doubling up of AML responsibilities between the IB and FCM, and more. Unfortunately, the IB is almost an afterthought with everything else going on, from the integration of swaps to implementing the BRG report recommendations to improving customer protections. But there are those willing to…...

The CFTC is not done writing rules mandated by the Dodd-Frank Bill. Customer protection is the focus and who can argue with that? However, it will have an impact on the way FCMs and IBs do business. Currently the CFTC is considering a change in margining policy requirements. That means FCMs must have the ability to calculate accurate margin requirement intraday. The changes may cause intraday margining by certain participants and will increase capital requirements of FCMs. The trickledown effect on the IB could require our retail clients to meet margin calls daily. The old way of receiving a check…...

I’ve been asked to moderate the NFA Representatives Panel at the upcoming NIBA membership meeting in September. This is an opportunity I’ve been hoping for — an opportunity to discuss specifics with our elected representatives. I’ve wondered how the IB and CTA representatives to the NFA interact with other Board of Director members – do they get together ahead of the meetings to discuss issues to bring before the Board? I’ve wondered how they interact with NFA staff – do they have regular communications with staff members to update themselves on topics on which the NFA is working? How carefully…...