Dear Members – If you think endless snow storms and wind chills below zero have gotten you pretty far down, don’t even look at the new and proposed regulation discussed below. Over at the NFA, fines are now in place for registrants, including IBs, who are late filing various reports. Fines are in the amount of $1,000 per day! No doubt there are some bad apples who file late regularly, but currently there are no exemption or waiver procedures in place for an IB who is late once during the term of membership. Also at the NFA, a proposal to....
Outline of Current NFA/CFTC/SEC Issues
CFTC CFTC Adopts Rules Regarding Risk Management Programs for FCMs New CFTC Regulation 1.11 imposes specific risk management requirements on FCMs that accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result from soliciting or accepting orders for the purchase or sale of any commodity interest. In accordance with the new regulation, each FCM is required to establish, maintain, and enforce a system of risk management policies and procedures designed to monitor and manage the risks associated with the activities of the FCM, taking into account market,....
CME Group Market Data Policies Update
In November, 2013, the CME Group announced changes to market data license agreements and schedules. The resulting increase in user fees significantly affect all NIBA members. NIBA members voiced several concerns surrounding the changes and the Executive Board of Directors presented them to the exchange. On February 14, 2014, the CME Group released an update to the market data policies. One of our major issues has been addressed: the definition of non-professional. Non-professionals are now defined to include certain small business entities such as LLC, trusts, etc., that are: (i) not affiliated with a Professional, and (ii) whose primary business....
CME Group/NFA/NIBA – March 6 – Newport Beach, CA
March 6, 2014: 2:00pm – 7:00pm Sessions Begin: 2:30pm Marriott Newport Beach There will be two information sessions followed by a networking reception with the speakers, CME Group, NFA representatives and the NIBA. There is no cost for this event – all futures industry participants are invited, but you must register in advance. Session 1: Why Smart Money Invests in Managed Futures – CME Group’s Initiatives Going Forward: Presented by David Lerman, Senior Director, Client Development & Sales, Asset Managers, CME Group Session 2: Compliance Issues featuring the NFA: Presented by Patricia Cushing, Director Compliance, National Futures Association and Matt Reynolds,....
Suitability: At the Corner of Series 3 and Series 7
Recent changes to FINRA’s suitability rule may have implications for the futures industry. The futures industry has never had a suitability rule. In 1978, the U.S. Commodity Futures Trading Commission (CFTC) considered adopting one but decided against it, opting instead to impose on a Series 3 broker a robust duty to disclose the risks and let the customer decide whether to engage in futures trading.1 When the NFA adopted Compliance Rule 2-30, it followed the CFTC’s lead: “Once … the customer has been given adequate disclosure, the customer is free to make the decision whether to trade futures and....
Request for Comments – CPO/CTA Capital Requirement and Customer Protection Measures-Comments Due by April 15, 2014
NFA regularly reviews the continued effectiveness of its regulatory requirements. Over the past three years, NFA has issued 26 Member Responsibility Actions (MRAs), and 92% of those MRAs were against CPO and/or CTA Members. Most of these matters involved misuse of customer funds (including one CPO that improperly used pool funds because it had insufficient assets to operate as a going concern) and/or misstating net asset values and/or performance information. In light of these actions, NFA is reviewing the current regulatory structure applicable to CPO and CTA operations. In particular, NFA is looking at ways to strengthen the regulatory structure....
FinCEN Issues an Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies
On December 4, 2013, 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 through FinCEN’s website at: http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-A008.html...
CME Group Market Data Fee FAQ Clarification
CME Group Market Data Fee FAQ In response to the NIBA, the CME Group Market Data Team has submitted the following clarification to its November 12, 2013 notice regarding market data fees: Question: I am an end user, with one software application that has order routing capabilities to multiple broker/FCMs. Do I have to pay the market data fees for each broker/FCM connection? Answer: No, market data fees are assessed per device, not per the number of order routing connections. The CME Group has indicated it will notify us promptly of any additional clarifications or changes to the original announcement....
CFTC Rule Change Proposal
The Commission is currently asking for comments on a proposed rule change. They wish to add a section to require that each person registered as an IB, CPO or CTA become and remain a member of a registered futures association, such as the NFA. Under CFTC Reg. 4.14(a)(9) a person is not required to register as a CTA if it does not: (i) direct any client accounts; or (ii) provide commodity trading advice based on, or tailored to, the commodity interest or cash market positions or other circumstances or characteristics of particular clients. This exemption from registration primarily applies to....
Peregrine Financial Trustee Seeks to Return $41 Mln to Clients
Peregrine Financial Group’s bankruptcy trustee plans to return up to $41 million to former customers of the failed futures brokerage in the second payout since the firm collapsed 17 months ago. Court-appointed trustee Ira Bodenstein is seeking to return about 7 percent, or $27.5 million, to Peregrine customers who traded on U.S. exchanges, according to court filings. In the first payout last year, the group, which comprised the bulk of the firm’s clients, received back about 30 percent of the money they had in accounts when Peregrine failed. Clients who traded on foreign markets would get back about 45 percent....