NIBA Journal

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

December 17, 2015

POSITION PAPER OF JAMES L. KOUTOULAS, ESQ. AND JOHN L. ROE

Dear Members, It is time for another NFA Board of Directors election. If it seems like we just asked you for your vote, it’s because we did as you elected us to two-year terms less than a year ago. However, due to changes to the Board’s composition, we currently find ourselves up for election yet again in the only two contested races on the whole Board. We know that the constant stream of elections may seem unimportant, but as someone who makes their living subject to ever-increasing regulation, taking the time to vote for effective Board representation directly benefits your business. One of the unique things about NFA is that it is chartered as a democratic, Member-run self-regulatory organization. This carries with it substantial responsibilities for both Members and Management to balance maintaining the rights of Members with protecting customers and avoiding regulatory capture whereby the organization could be run...

Joint Statement of Douglas Bry and Ernest Jaffarian Candidates for NFA Board of Directors CTA/CPO Seats

Dear CTA/CPO NFA Member – Two of the CTA/CPO Board Seats are contested this year, your vote is critical, and we would appreciate your consideration. We’ve served on the NFA Board for the past 4 years, running in and winning contested elections in 2012. The decision to run was driven by our disappointment with NFA’s response to the bankruptcy of MF Global, and our belief that a fresh perspective was needed to move the organization forward. Each of us has experienced over 25 years of growth and evolution in the futures industry, and we bring a small business entrepreneurial spirit to a Board that is for the most part dominated by large Wall Street firms who do not share our view on quite a few issues. Often in the minority, we have been strong, polite and persistent advocates, and have good working relationships with the other Board members and NFA...

NFA Board GIB Rep Paul Georgy, President of Allendale Inc.

Paul has been involved in the IB business for more than 30 years. He has served the NIBA in all officer positions before being elected to the NFA Board of Directors. Paul has served on several committees at the NFA as well as Vice Chairman of the Board of Directors. IB owners, office managers, and compliance personnel; 2016 will be another year of adjustments and likely more consolidation in the futures industry. Since Congress passed the Dodd-Frank bill, the CFTC has been developing regulation to meet the goals of this legislation which continues to impact our business. In recent conversations with the CFTC Chairman and other commissioners, it appears they may be willing to revisit the scope and benefit of some of post Dodd-Frank rule making. The NFA continues to provide guidance to the Commission on the impact to the industry caused by current policy and suggests possible adjustments for...

2016 Member Events

The following association events are currently scheduled for 2016. Please mark your calendar now to save-the-dates. If you are interested in being on the planning committee for any meeting, please contact the meeting chairperson. April 20: New York City - Annual east coast meeting held at the New York Athletic Club. Two or three business sessions beginning at about 1:30pm followed by a networking cocktail hour. (CTA Expo NYC is scheduled for April 21, the following day) Chairman: Howard Rennell, hrennell@e-windham.com July 14: Chicago - Co-sponsored event held at DePaul University, downtown Chicago campus. Two business sessions beginning at about 1:30pm followed by a networking cocktail reception. Chairman: Jerry Nolan, jnolan@countycorkllc.com September 14: Chicago - Annual membership membership meeting held at CME Group Building. A full-day program including a demonstration hall, lunch and speaker and a cocktail reception. (CTA Expo Chicago full-day is scheduled for September 15) Chairman: TBA --...

Chairman Letter December 2015

Dear Members - The NIBA was founded in June 1991. During the past 25 years, we have become known as the association who educates and speaks for the retail professional community. We have earned the respect of our regulators and our industry by participating in the rule- making process at both the CFTC and NFA, and submitting position papers on everything from ethics training requirements to increased transparency for FCM financial reports. As we enter our 25th Anniversary Year, NIBA will continue to represent your opinions. You will also see some changes. Originally, the NIBA’s membership was almost entirely made up of Introducing Brokers. A few years ago Commodity Trading Advisors and inpidual Associated Persons were invited to join the association. Today about one-third of the membership is registered in the CTA category, either as a dual registration or stand-alone. CTAs and APs are represented on the board of directors...

Housekeeping, Reminders, and Updates December 2015

COMMODITY FUTURES TRADING COMMISSION Extension of Time-Limited No-Action Relief from Certain Recordkeeping Requirements On December 8th, the Commodity Futures Trading Commission (“CFTC”) issued a press release regarding the no-action letter issued by the Pision of Swap Dealer and Intermediary Oversight and Pision of Market Oversight (Press Release: PR729-15) . The no-action letter extended the relief relating to records of oral communications, which was originally set forth in CFTC Staff Letter No. 14-147, from 2014. The relief in Letter No. 14-147 was set to expire on December 31, 2015. The 2014 letter granted no-action relief to commodity trading advisors (“CTAs”) that are registered with the CFTC and are members of designated contract markets or of a swap execution facilities from the requirement to record oral communications under CFTC Regulation 1.35(a). Further, the relief is also granted to market participants covered by the rule. Such market participants will not be required to...

By NIBARead article

December 15, 2015

6 min read

NIBA - Get to Know the Regulator

U.S. Commodity Futures Trading Commission Division of Clearing and Risk Who is in charge of the Division of Clearing and Risk: DCR is run by a Director, who is assisted by the DCR Deputy Directors and Chief Counsel. Jeffrey Bandman is the Acting Director, and the Deputies and their respective branches are as follows: Eileen Donovan, Deputy Director of Clearing Policy; Sarah Josephson, Deputy Director of Product Review; John Lawton, Deputy Director of Risk Surveillance; and Julie Mohr, Deputy Director of Examinations. Robert Wasserman is the DCR Chief Counsel. How many employees are a part of DCR: DCR has 72 employees, who are located in the CFTC’s Washington, D.C. Headquarters and in the Chicago regional office. What is the general function of DCR: DCR oversees compliance with the provisions of the Commodity Exchange Act and Commission regulations pertaining to clearing, derivatives clearing organizations (DCOs), and related matters. For example, DCR...

By NIBARead article

December 15, 2015

5 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. I am a registered Associated Person for an Introducing Broker. We provide broker assisted execution services to our customers. Of my responsibilities, one is to enter customer orders into any number of the electronic trade execution platforms our firm uses. I have my own unique log-in credentials for each...

By NIBARead article

December 15, 2015

5 min read

The CFTC's Proposal to Regulate Automated Trading: Our Top 10 Takeaways

The Commodity Futures Trading Commission (“CFTC”) has proposed a new rule -- so-called Regulation AT -- to regulate the use of automated, or algorithmic, trading systems that trade commodity interests (e.g., futures and swaps). The CFTC’s proposal comes at the end of a year that saw a noticeable increase of enforcement actions arising from disruptive trading practices, including spoofing and market manipulation, and which included the first criminal conviction for spoofing in U.S. v. Michael Coscia. In this Client Alert, we highlight the most significant aspects of Regulation AT. 1. A New Registration Mandate. Under Reg. AT, registration will be required for market participants that (i) engage in proprietary algorithmic trading, (ii) have “direct electronic access” to a designated contract market (i.e., an exchange) (an “Exchange”), and (iii) that are not already registered. Individuals who are considered “AT Persons” and not currently registered with the CFTC will be required to...

NIBA in DC

On November 9, 2015, Steve Petillo, Mike Burke and I travelled to Washington, DC to meet with members of the Commodity Futures Trading Commission at their offices. Here’s a summary of that meeting as well as the other meetings we had while there. We brought three issues which were suggested by NIBA members to the attention of Chairman Massad and Commission Bowen. Both Commissioners, along with their staff, told us that monitoring the effectiveness of Regulation 1.35 (Recording Communication that may lead to a Transaction) and Regulation 1.22 (“Residual Interest”) is ongoing. We reiterated that we believe Reg. 1.35 in its final form may not have taken into account revenue numbers from all Introducing Brokers, only from IIBs. Both Commissioners agreed to look at any additional information we are able to provide. We voiced our support for pushing back the automatic start of next phase of Reg. 1.22, and renewed...

By NIBARead article

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