NIBA Journal

Insights, analysis, and updates from the National Introducing Brokers Association

February 9, 2023

Regulatory Update - NFA Bylaw 1101

NIBA Service Provider Member, Scott Diamond of Ballard Spahr provides insights on recent regulatory developments concerning introducing brokers. Introducing Brokers, Commodity Trading Advisors and Commodity Pool Operators have long had a symbiotic relationship. Many account controllers understand that the services of a quality broker can be invaluable due to the ability to focus on the account controllers business in a way that wirehouse financial advisors and front end systems cannot. However, dealing with account controllers poses additional potential issues to the IB under the NFA bylaws. NFA bylaw 1101 prohibits IB members from accepting orders from a person or entity that is not an NFA member but is required to be an NFA member. This includes accepting orders from unregistered commodity trading advisors and commodity pool operators who fail to annually renew their exemptions. Typically when IBs open an account for an account controller, they use the NFA’s BASIC system...

5 Strategies To Grow Your Financial Services Business Using Digital Marketing

Highlights Ad spending in the Digital Advertising market is projected to reach US$616.00bn in 2022. The market's largest segment is Search Advertising with a market volume of US$260.00bn in 2022. Financial Services represent approximately 6.1% of total digital ad market in 2022 In the Digital Advertising market, 69% of total ad spending will be generated through mobile in 2027. Research analysts expect the digital marketing market to grow from approximately $616 billion in 2022 to over $1 trillion by 2027. More and more firms will be embracing digital marketing strategies as part of their new client acquisition and reaping its benefits. Effectively developing the tactics that direct your firm’s focus to certain targets, desired marketing actions and clearer messaging can help you achieve your growth goals in the next year. Here’s the strategies most of our clients are utilizing to effectively grow their businesses - what’s working now, with an...

By NIBARead article

December 9, 2022

4 min read

NFA Member Responsibilities for Third Party (Vendor) Risk Management

One of the top priorities for any business is to protect its systems and data from cyber security threats. Many security attacks come through vendors which have access to critical systems and confidential data, and NFA Interpretive Notice 9070 (‘Information Systems Security Programs’) and NFA 9079 (‘Use of Third-Party Service Providers’) establish member responsibilities and guidelines for third party (vendor) risk management to help protect against these threats To mitigate key risks associated with outsourcing, companies must have a written security policy tailored to their needs, and should implement a vendor risk management process which covers the lifecycle of their vendor relationship including the following stages: Initial Vendor Risk Assessment: all risks associated with a particular function should be identified and evaluated to determine whether outsourcing is appropriate and beneficial to the business. The following aspects should be considered: Data Protection: What critical systems and confidential data might the Third...

Businesses must evolve to meet challenges and uncertainties ahead

Economic Disruptors Will Continue: Crucial Actions Needed to Minimize Risks Freight disruptions, foreign conflicts, and government policy – while we cannot know the impacts with certainty, we do know they are creating market volatility. Global supply chain disruptions like these, coupled with pricing uncertainty, and of course the weather conditions, are making it more difficult than ever to operate commodity-based operations in traditional ways. “There are just too many factors working against you, and the future requires a different approach,” says Pinion Ag marketing strategist Eric Osterhaus. It is important to recognize that price does not trade on fundamental reasons alone. It is easy to stick to fundamental headlines too long and end up being caught by a headline that changes the market dynamic, oftentimes causing producers to market defensively. “As the agricultural and fuel markets have become more global, this has added complexity to simple seasonal supply and demand...

By NIBARead article

November 3, 2022

2 min read

CFTC Enforcement Action Update

NIBA Service Provider Member, Scott Diamond of Ballard Spahr provides insights on select recent CFTC enforcement actions concerning introducing brokers. CTAX Partners – Too Close for Comfort This case serves as a reminder that the CFTC views charging excessive commissions as a form of theft and fraud. Here, CTAX Partners (an introducing broker) and CTAX Series, LLC (a commodity pool) were both managed by Mr. Purvesh Mankad, who placed pool trades through his own IB. When Mankad placed his futures trades for CTAX Series through CTAX Partners, he charged $50 per round turn. When unaffiliated CTAs placed their orders for CTAX Series through CTAX Partners, they were charged $20 per round turn. Such disparate commissions were viewed as undisclosed conflicts of interest, acts that were inconsistent with disclosures made in the pool offering memorandum, and contrary to guidance by the firm’s compliance advisor. In settling the matter in the Federal...

By NIBARead article

October 21, 2022

6 min read

CFTC Considering Whether to Allow Investors to Wager on U.S. Elections

Written by: Matthew Kluchenek, Partner, Mayer Brown LLP; Matthew Bisanz, Partner, Mayer Brown LLP; Anna Easter, Associate, Mayer Brown LLP Last month, the Commodity Futures Trading Commission (“CFTC”), the regulator with oversight over much of the U.S. derivatives markets, announced that it will decide by the end of October 2022 whether to allow investors to wager on the outcome of U.S. elections. A Recent Submission by KalshiEX LLC has Prompted that CFTC to Revisit the Issue KalshiEX LLC (“Kalshi”) is a CFTC-registered Designated Contract Market (“DCM”) that provides investors with the ability to trade on the outcome of events (i.e., event contracts), such as potential Moon landings. In July 2022, Kalshi submitted a new event contract for CFTC approval. The new contract (the “Congressional Control Contract”) is based upon which political party will control each chamber of the U.S. Congress in the upcoming term(1). If approved, each Congressional Control Contract...

By NIBARead article

September 29, 2022

3 min read

Enforcement Action Break Down

NIBA Service Provider Member, Ballard Spahr provides their insights on select recent CFTC enforcement actions. EOX Holdings LLC EOX Holdings LLC is an introducing broker who was recently found by a Texas jury to have violated CFTC rules related to handling of customer information. While the case serves as a reminder about best practices and supervisory obligations, it also shows potentially important limits to the CFTC’s enforcement power. EOX was responsible for executing clients’ block trades, while it simultaneously allowed one of its associated persons to assume discretion over a client’s account. In order to curry favor with the discretionary client, the EOX-associated person gave the client confidential block trade information and took the other side of customer orders without the customer’s consent. The jury found that the associated person violated CFTC Rule 155.4 – Trading Standards for Introducing Brokers. The jury found that EOX also committed recordkeeping violations (Rules...

NIBA/DePaul 7th Annual Symposium - Session Summaries

NIBA is excited to be back in person and continue the annual Joint NIBA/DePaul Symposiums. Here we take a deeper dive into what will be discussed throughout the program. If you have yet to register please do so as space is filling up quickly. Register Here. [Session 1] Blockchain: A Financial Industry Evolution Blockchain is revolutionizing the way companies do business globally. From enhanced security to expedited payment and robust contract administration, Blockchain has already changed outdated and archaic processes in the financial industry. But how is it all being achieved and how does it impact your daily business? Yuri Zamostin, CEO of Coinifide will start off this session by explaining exactly what Blockchain is...and why you need to know more. He'll share examples of its applications in use in our industry currently, and preview what the future holds. Join in the session discussion as Mark Shore, from DePaul University...

Featured Speakers - NIBA/DePaul University Joint Symposium 2022

We are pleased to introduce our featured speakers at the 2022 NIBA/DePaul University Joint Symposium. Please click here for the full agenda and registration information. Melinda Schramm, Founder & Chairman, NIBA I’m celebrating my 46th anniversary in the futures and options industry this year. From running orders on the old Mid-Am exchange to FCM executive to owning my own shop...it's a great career! I currently serve on the NFA IB Advisory and Hearing Committees; I have testified before Congress, the CFTC and in court numerous times to stand-up for the NIBA community; and, I am the author of The Complete IB Handbook, now in its 9th Edition. I founded NIBA in 1991 to give derivatives professionals a voice in their own regulation and to provide education in order to better serve their clients, stay in compliance and grow their businesses. I’m also an attorney focused on Intellectual Property and a...

7th Annual Joint NIBA/DePaul University Symposium

NIBA is pleased to announce the 7th Annual Joint NIBA/DePaul University Symposium for 2022. This is our first time back in person and we could not be more excited to get back together with membership. This year's Symposium is on September 15th and is a half day program beginning at 1:30pm. The event is offered in a hybrid format. For those of you who will be joining in person the event will be at the DePaul University Loop campus on the 8th floor and will be followed by a networking cocktail reception on the rooftop terrace. In-person capacity is limited so we encourage you to register early for this event. This year's Symposium will tackle relevant topics with top industry professionals. Please take a look at the event page to view the full agenda and list of speakers. https://www.theniba.com/niba-event/annual-joint-niba-depaul-university-symposium-3/ Thank you to this year's event sponsors  

By NIBARead article

Page 3