As one of four NFA Board Members representing CTAs and CPOs, I'm working to represent the interests of a broad spectrum of money managers and traders. But just who are these constituents and what are their interests? The answer is not simple and increasingly a moving target.
That is because the population of CTA/CPO member firms is rising exponentially. In 2012, the CFTC rescinded a widely held exemption for certain commodity pools. In addition, the CFTC broadened the the definitions of CTAs and CPOs to include swaps. As of the first quarter of 2013, those changes yielded over 1,100 new members in the CTA/CPO category, almost half of whom use swaps. More firms will be required to register later this year, as an exemption from registration expires for "fund of funds" and family offices.
To get a handle on just what are the needs of CTAs and CPOs, I have committed to holding quarterly CTA/CPO Town Hall Meetings to discuss NFA matters. I hope these Town Halls will provide a forum for a constructive dialogue on the challenges facing the industry and what NFA can do to meet those challenges. In addition, I hope these Town Halls will provide a means of better communicating the ever changing landscape of commodity regulation in a post-MFG/PFG world.
The implementation of the Dodd-Frank legislation has resulted in several hundred pages of rules being added to the Code of Federal Regulation, not to mention new rules from the NFA. While the NFA and CFTC frequently issue guidance to accompany rule making, that guidance often needs guidance. CTAs operate in disparate circumstances and the application of rules to specific facts can be murky, often not covered by interpretive notices. It is my goal to use our Town Hall meetings to better communicate how CTAs and CPOs can remain in compliance.
Moreover, my fellow CTA Board Members and I seek to bring a reform agenda to NFA. We hope to affect change on a range of issues, from fraud detection and prevention to audit procedures, executive compensation and arbitration rules just to name a few. As we work through these topics, our efforts will be informed by our ever evolving membership. I encourage you to participate. With your help, we can ensure that the self-regulation model continues to foster a safe, efficient marketplace for money mangers.
About the Author
John Roe, is the President of ROE Capital Management, a CTA founded in 2007 and located in Chicago, IL. The CTA trades individually managed futures accounts. BTR Trading Group, his IB also located in Chicago, was established in 2010. In 2011, he co-founded Commodity Customer Coalition, an advocacy group which actively sought the return of MF Global’s customers funds as well as various industry changes to mitigate the impact of future FCM bankruptcies. John is currently serving as a CTA representative to the NFA Board of Directors, and can be reached at jroe@BTRtrading.com.