The CFTC’s Proposal to Regulate Automated Trading: Our Top 10 Takeaways

The Commodity Futures Trading Commission (“CFTC”) has proposed a new rule — so-called Regulation AT — to regulate the use of automated, or algorithmic, trading systems that trade commodity interests (e.g., futures and swaps).  The CFTC’s proposal comes at the end of a year that saw a noticeable increase of enforcement actions arising from disruptive trading practices, including spoofing and market manipulation, and which included the first criminal conviction for spoofing in U.S. v. Michael Coscia. In this Client Alert, we highlight the most significant aspects of Regulation AT.   1. A New Registration Mandate.  Under Reg. AT, registration will…...

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Ask the NFA

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…...

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NIBA – Get to Know the Regulator

U.S. Commodity Futures Trading Commission  Division of Clearing and Risk Who is in charge of the Division of Clearing and Risk:  DCR is run by a Director, who is assisted by the DCR Deputy Directors and Chief Counsel. Jeffrey Bandman is the Acting Director, and the Deputies and their respective branches are as follows: Eileen Donovan, Deputy Director of Clearing Policy; Sarah Josephson, Deputy Director of Product Review; John Lawton, Deputy Director of Risk Surveillance; and Julie Mohr, Deputy Director of Examinations. Robert Wasserman is the DCR Chief Counsel.  How many employees are a part of DCR:  DCR has 72…...

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The Clock is Ticking; Required Cybersecurity Policies

The headlines in today’s paper should read: “The Wild West is back! Stick ups and heists at an all-time high!” Only today the villain is not riding up to a stage coach on a horse or storming a bank with police sirens in the background. Today’s banks also aren’t holding gold bullion and stacks of bills. Rather today’s “banks” are holding something much more valuable – personal identifying information that criminals the world over are trying to pilfer at an alarming rate.  Operating a regulated commodity futures and derivatives firm successfully is already challenging.  Operating such a business when criminals…...

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NFA Compliance – Preparing for an NFA Exam

Since 2012, the number of CPOs, CTAs, and IBs required to register with NFA has seen a dramatic increase.  With this increase came a renewed commitment by regulators to not only audit new NFA Members within the first year, but more frequently thereafter as well. The frequency of subsequent on site audits depends upon an analysis of risk factors.  Some of the risk factors include but are not limited to: Customer Complaints Qualifications of Principals  Principals Prior Firm Regulatory Issues Reviews of Promotional Materials Regulatory Filing Issues Time between Registration and/or last NFA Exam Of late, NFA has been scrutinizing…...

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Panel Summary-Top 5 Questions

Michael Coglianese had the pleasure of moderating a Panel of experts at the NIBA Conference.  Mike was impressed by the answers as well as the insight of the questions from the audience.  Here are some of the questions summarized below: Why should IRAs be important to the Business of an Introducing Broker? First, the managed futures industry is important to the alternative investment space, giving individual investors another avenue to diversity and protect their portfolio.   There are $7.3 Trillion in IRA assets as of 2014.  IRAs are investment accounts  that allow people particular tax benefits.  Individuals need options to…...

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Ask the NFA–Revision to August

Revised Answer to Question 1 of the August 2015 Ask the NFA Article: Selecting and Recommending CTAs– A 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.  A Recommending CTA is required to be registered and an NFA Member since the CTA is providing commodity trading advice based on, or tailored to,    particular clients. The Recommending CTA is not required to provide its own disclosure document to clients and as such is not required to provide past…...

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Housekeeping, Reminders and Updates–Sept 2015

NATIONAL FUTURES ASSOCIATION Effective Date of New Requirements for Forex Dealer Members (“FDMs”) The NFA announced the effective date of the new capital and compliance requirements for FDMs after the Commodity Futures Trading Commission (“CFTC”) approved the NFA’s amendments to NFA Financial Requirements Section 11, NFA Financial Requirements Section 12 and NFA Compliance Rule 2-36. The CFTC’s approval of changes to Rule 2-36 also included the interpretive notice titled NFA Compliance Rule 2-36: Risk Management Program for Forex Dealer Members. As of January 4, 2016, FDMs must comply with the new financial and compliance requirements. NFA Financial Requirements Section 11…...

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Ownership and Control Reporting (“OCR”)

The reporting deadline under the CFTC’s Ownership and Control Reporting (“OCR”) rules is September 30, 2015.   Although these rules became effective in February 2015, the CFTC granted firms an extension which until September 30 (six months) to collect and report the additional information information.    What to Know In November 2013, the CFTC finalized new rules for Ownership and Control Reporting (“OCR”) which significantly expand the large trader reporting requirements for U.S. FCMs and their clients under CFTC Regulation Part 17 CFR 17.01(a), 17.01(b) and 20.5 (1).     What this means for customers is that your FCM is now required to…...

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NFA Representative Annual Report

Introducing Broker and CTA/CPO representatives on the NFA Board of Directors will present their annual report to NIBA members on September 24 during our Annual Members Meeting. The following representatives will be present: Paul Georgy, GIB Mike Burke, IIB James Koutoulas, CTA/CPO John Roe, CTA/CPO Doug Bry & Ernest Jaffarain, CTA/CPO (invited) Each year your elected representatives to the NFA BoD report to the NIBA members on issues the NFA is working on which affect our daily business. I am moderating the panel this year, and I would like your help. Will you send me your questions for the panel?…...

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