NIBA Journal

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

May 25, 2023

The Evolution of Trading: Navigating Multi-Broker, Multi-Asset Platforms

By Rob D’Arco, CEO Rival Systems After 20 years of working in the trading industry, I’ve gained a unique perspective working with traders throughout their careers. Technology plays a critical role in their success, from the individual click trader on one exchange to the global firm running ultra-low latency automated trading strategies with an enterprise risk system. This article will explore the technical requirements as traders evolve and the key considerations when deciding which platform to use for a more streamlined, comprehensive trading and risk management experience. A Simple Beginning For a new trader, it's easy to begin trading with one broker, exchange, and account. It's cost-efficient and straightforward. The trader creates an account with the broker, logs into the broker's front end, and starts trading. Your top priority is to get up and running quickly with the least expense and to test your strategies. After that, things operate efficiently...

By NIBARead article

May 17, 2023

2 min read

NIBA Compliance Officers Group Letter

To All Derivatives Compliance Officers: NIBA is excited to announce the formation of a new working group specifically focused on the concerns of compliance officers in the derivatives industry. The Compliance Officers Group (COG) will discuss everything from regulatory updates to rule changes and enforcement actions…all the things you deal with every day. The first meeting of COG is scheduled for September 12 at the Chicago offices of Mayer Brown. We hope to also have a webinar or two during the fall/winter of 2023. This September in-person meeting will be a Roundtable discussion. We’ll discuss two or three “hot” topics in an informal two-hour conversation meant to include everyone’s major concerns and opinions. NIBA’s Compliance Officer Group is open to all compliance officers of firms that are registered with the CFTC and members of the NFA, and lawyers focused in the area of futures and derivatives. At our first meeting,...

CTA Connection Sponsored Content: Working with the IASG Database

While industry veterans in the futures space understand the value of CTAs in a portfolio, hedge fund assets under management dwarf those AUM totals by over thirteen times. To explain it like one of my traders, “There is a multi-trillion-dollar industry pushing stocks no matter how they perform.” We do not have that luxury as investors come to us looking to steady their portfolio and ultimately hold us to a more demanding standard. After all, the marketing machine is owned by our competition. This puts the value of reaching potential prospects at a higher premium. Each conversation is one more that we can position to help someone now or down the road. So where does one look for these investors? If we start with the expectation that most of the desirable clients will be QEP qualified, we immediately cut off 90.3% of the population of the United States who fall...

By NIBARead article

February 9, 2023

3 min read

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

NFA Member Responsibilities for Third Party (Vendor) Risk Management

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

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

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...

By NIBARead article

Page 3