NIBA Journal

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

Chairman's Letter
Member Announcements
August 13, 2015
4 min read

Chairman's Letter

0 0 1 2 12 Gate 39 Media 1 1 13 14.0 Normal 0 false false false EN-US JA X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:8.0pt; mso-para-margin-left:0in; line-height:107%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:Calibri; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} Dear Members: 0 0 1 53 307 Gate 39 Media 2 1 359 14.0 Normal 0 false false false EN-US JA X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:8.0pt; mso-para-margin-left:0in; line-height:107%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:Calibri; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} As we approach our 25th Anniversary Year, I want to emphasize that the mission of the NIBA is to provide education for IBs, CTAs and their APs which enables those registrants to grow their business. Education includes knowledge of regulation and how to comply, product/market updates, and marketing and other business practices...

By NIBARead article
Ask the NFA
July 30, 2015
4 min read

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 nfacomments@theniba.com 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 staff. My Introducing Broker operates a Branch Office. The Branch Office's futures related activities is limited to opening 3rd party CTA managed accounts. This branch does not have its own website, nor does it produce its own promotional material. The Branch Office will not provide trading advice to clients. Does...

By NIBARead article
HOUSEKEEPING, REMINDERS AND UPDATES JULY 2015
July 30, 2015
5 min read

HOUSEKEEPING, REMINDERS AND UPDATES JULY 2015

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 operators (“CPOs”) that only operate pools pursuant to a claim of exemption from registration or for which the CPO maintains an exclusion from the definition of a CPO. The exemption relief was detailed in CFTC Letter 14-115. In that letter, the DSIO reasoned that requiring the CPOs, reference at the...

By NIBARead article
The Vanishing FCM
July 30, 2015
3 min read

The Vanishing FCM

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 a dramatic decline, but a careful look behind the numbers reveals that many firms registered as FCM do not conduct any futures business. Retail forex was permitted to be conducted by banks, insurance companies and broker dealers or FCMs. The easiest route was for a forex dealer to register as...

By NIBARead article
NFA BYLAW 1101: APPLICATION OF NFA BYLAW 1101 IN VARIOUS COMMON SCENARIOS
July 30, 2015
15 min read

NFA BYLAW 1101: APPLICATION OF NFA BYLAW 1101 IN VARIOUS COMMON SCENARIOS

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 of the violation.” The determination of whether a Member “knew of should have known of the violation” largely hinges upon the procedures that a Member has in place and its diligence in following such procedures. When referenced in this article, the term “person” includes entities and other business structures. In...

By NIBARead article
NIBA/DePaul Event Video Recap
July 30, 2015
1 min read

NIBA/DePaul Event Video Recap

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

By NIBARead article
FinCEN issues an advisory on the FATF-identified jurisdictions with AML/CFT deficiencies
July 23, 2015
1 min read

FinCEN issues an advisory on the FATF-identified jurisdictions with AML/CFT deficiencies

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.

By NIBARead article
The Remarkable Growth of Options on Futures
Trading Technology
July 16, 2015
4 min read

The Remarkable Growth of Options on Futures

Trading of futures options is growing rapidly and has widely been viewed as a market primed for expansion. While somewhat nascent compared to equity and index options markets, the Tabb Group expects futures options activity to grow strongly as financial market participants increasingly use these products as part of their investment and hedging strategies. Factors such as changing interest rate policies, the increased electronification of options, technology advancements and underlying futures becoming more attractive to investors are all having an impact. Post-financial crisis, we’ve seen the popularity of options on futures grow across all asset classes at CME Group. In April, we experienced significant growth in options as open interest jumped to more than 51.6 million contracts, up 21 percent year over year. Average daily volume in options across asset classes was nearly 2.3 million contracts, with more than 52 percent of those options trading electronically. During the first quarter,...

By NIBARead article
Annual Member Meeting- September 24, 2015
Member Announcements
July 15, 2015
2 min read

Annual Member Meeting- September 24, 2015

Annual Membership Meeting - September 24 - Chicago The NIBA Annual Membership Meeting is scheduled for September 24 at the CME Group Building in Chicago. This is a full-day event and includes a box lunch, cocktail reception and demonstration hall. In 2014, over 250 IBs, CTAs, FCMs and other industry professionals attended. This year’s event includes five business sessions: “The El Nino Effect” - how El Nino will affect the livestock, grain and financial markets “What I Really Want to Know” - the six compliance questions most often asked by IBs/CTAs to their compliance firms and accountants “NFA Representatives Update” - IB/CTA representatives answer to you “Cybersecurity - Before & After the Breach” - a general session on the year’s most talked about regulatory issue “Cybersecurity - What IBs and CTAs need to Know” - an industry specific session which includes the NFA This year’s luncheon speaker is Blu Putnam,...

By NIBARead article
Chairman's Letter
Member Announcements
July 15, 2015
2 min read

Chairman's Letter

Dear Members - I recently completed a survey of registered Introducing Brokers for the guide I am writing for the industry. I have been writing The Complete IB Handbook, now in its 5th edition, since 1999, and I learn a great number of things about our community each time your survey responses are returned. Of the IBs who responded, about 60% were Guaranteed IBs. Most of those indicated that the capital requirements and the current regulatory environment were the reasons they chose to be registered as GIBs. Over 25% of the respondent firms had been registered for 25 years or more; nearly 50% of those reported they had customer accounts open for seven years or more. About 20% of the IBs held registrations or professional licenses in addition to the IB status. The majority of other registrations named were overwhelmingly Commodity Trading Advisor (CTA) with a FINRA or some type...

By NIBARead article
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