Dear Members -
The NIBA submitted our comment letter to the NFA regarding its capital requirement proposal for CTAs and CPOs and other changes to the CTA registration status. We are firmly opposed to capital requirements for CTAs and to the elimination of registration status for the group of current CTAs which NFA refers to as “inactive.”
NIBA believes CPO criteria may be quite different than that for CTAs, and should be considered separately. The full text of our submission is found in this newsletter. We understand the NFA is considering all the submissions -- we hear there were many. We have requested a further opportunity to discuss this issue with the NFA before any regulations are changed.
During our May 1 meeting in New York, the NFA was a part of a panel presentation on this issue, and on concerns surrounding the ability of swaps registrants to comply with IB registration requirements. Our thanks to the NFA for participating.
Last month, we saw some relief granted with regard to Reg. 1.35 - Recording. While this helps some NIBA members, we think it does not go far enough. NIBA is continuing to communicate with the CFTC and NFA to see what other changes could be made to the regulation so that our members can comply effectively and at a modest cost. Be sure to read the update in this newsletter.
Also on our plate this month are the upcoming changes to Reg. 1.22 - “Residual Interest” as it has been dubbed by the regulators. While many FCMs are alerting their IBs well in advance of the final phase-in in November, most IBs don’t fully understand the changes these rules will require in handling customer account margin calls.
The NIBA will have a series of articles in upcoming newsletters regarding Reg. 1.22. We are also planning a meeting in Chicago for mid-July with our education partner, DePaul University to discuss this issue. We have invited the NFA and the CFTC to attend. The meeting will be open to all NIBA members and you will get an email notice which includes the details and registration.
This past month wasn’t all regulation and compliance. Thanks to everyone who made the May 1 New York event a success. Thanks particularly to Rich Strait and Kristi Aupperle, conference co-chairs’ Shane Stiles, conference moderator and to Howard Rennell, The Windham Group, who invited us into the NYAC.
Mark your calendar for September 22 in Chicago.
Best regards, Melinda
Melinda Schramm, Founder & Chairman