NIBA: Ask NFA
June 2016
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 the NFA and NIBA members. The answers were supplies by NFA staff.
This month's questions were selected from those submitted by NIBA members. The answers were supplied by NFA staff.
What is the general focus of an NFA audit for a CTA?
Because each firm has its own risks, the focus of CTA examinations is determined on a case-by-case basis. In general, during a CTA examination, NFA looks to ensure that the CTA is operating in compliance with NFA rules and CFTC regulations. Typical areas of focus during a CTA examination are registration, disclosure, promotional documents, trade allocations and performance reporting.
What are the rules when issuing commission credits to customers?
Although there are no specific rules surrounding commission credits, it is important to keep in mind that CFTC registrants cannot guarantee against or limit loss. This includes issuing commission credits to limit or guarantee against loss.
What can and can't a non-registered person do in a commodity office?
Non-registered persons are prohibited from soliciting or servicing customer accounts. However, they may act in a clerical capacity.
If the trader of a CTA has POA over an account that is not part of the CTA program does that need to be disclosed in the CTA Disclosure Document?
Performance of accounts managed by the CTA, regardless of the program, must be disclosed in a CTA Disclosure Document, with the exceptions of proprietary trading accounts as defined by CFTC Regulation 4.35(a)(8), or accounts of qualified eligible persons pursuant to a CFTC Regulation 4.7 exemption.