NIBA Journal

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

February 25, 2015

Chairman's Letter

Members of the NIBA - Just prior to entering the trading pit in the 1983 film “Trading Places,” Louis Winthorpe, III (as played by actor Dan Aykroyd) declares, “Well, this is it, the last bastion of pure capitalism left on earth.”  While there may have been some exaggeration in that comment, it was certainly true that just by talking to a floor clerk or being on the morning call, a broker could form an opinion about market participants and direction for any particular day, and pass that information on to customers located far from the trading floor.  On February 4, the CME Group announced it will close most of the futures trading pits in Chicago and New York by July 2. Exceptions are the S&P 500 futures pit and some options pits. CME Group sites the dwindling of open outcry volume as the primary reason for the closures. It is...

Folow-UP: NIBA in SoCal

NIBA’s 3rd Annual Event in southern California was held in Newport Beach, CA February 19, 2015 at the Newport Beach Marriott Hotel. Over 50 industry professionals attended -- about 45% registered as CTAs, 45% as IBs and the remainder as FCMs or service providers. Twenty individuals were attending their first-ever NIBA event! Blu Putnam, Chief Economist for the CME Group presented one of two business sessions. He spoke about the economic outlook for the remainder of 2015, covering the topics of International GDP growth in China, Japan and the Euro-zone; The likelihood the Fed will raise rates in 2015; Emerging markets; and, Oil-challenged countries and their effects on U.S. growth. Patricia McDonald, Partner, Baker & McKenzie presented “Recent Tax Developments Affecting IBs and CTAs” as the second session. She highlighted several recent pieces of legislation of which registrants should be aware, and which may impact them personally as well as...

NFA Board Election Update

Congratulations to Mike Burke, John Roe and James Koutoulas who were elected to the NFA Board of Directors in the recent election. John, Roe Capital and James, Typhon Capital Management were re-elected in the CTA/CPO category. Mike Burke, HighGround Trading and NIBA Vice-President was elected to his first 2-year term as the IIB representative. He joins Paul Georgy, Allendale, Inc. and former NIBA President who is the current GIB representative on the NFA board. Thank you to Jeff Malec, Attain Capital Management who served as IIB representative for the past two years.

By NIBARead article

February 25, 2015

4 min read

Exempt CPO Annual Affirmations and NFA Bylaw 1101 Implications for Introducing Brokers

Fund managers relying upon exemptions from registration as commodity pool operators (CPOs) pursuant to CFTC Rule 4.13(a)(1), 4.13(a)(2), 4.13(a)(3) or 4.13(a)(5) (or an exclusion in the case of CFTC Rule 4.5) must re-affirm their exemptions on file with NFA by March 2, 2015. While the re-affirmation filing is the responsibility of the CPO, introducing brokers (IBs) that do business with exempt CPOs need to ensure annually that CPOs that they do business with are properly exempt. Failure to do so could result in a violation of NFA Bylaw 1101, which provides that no NFA Member (including IBs and CPOs) shall do business with another person who is required to be registered with the CFTC, but is not. The annual affirmation is required to be filed electronically with NFA through its electronic filing system. Evidence of the affirmation is available on NFA BASIC for purposes of ensuring NFA Members such as...

By NIBARead article

February 25, 2015

10 min read

CFTC/NFA Response to the Swiss Franc Move

Roughly a month ago the Swiss National Bank rocked the world with a surprise announcement. During the middle of the night on January 15, 2015, Swiss banking authorities announced they would lift a three year exchange rate target of 1.20 Francs per Euro; a decision almost no one saw coming. The result? A meteoric rise in the value of the Franc against both the Euro and the US Dollar in a matter of minutes. At one point the Franc had rallied as much as 39%; a staggering move for any market but a real record setter for global foreign currency traders. US Industry Damage One of the most widely publicized victims of the surprise run up in the Swiss Franc was FXCM, a Futures Commission Merchant (“FCM”) registered with the US Commodity Futures Trading Commission (“CFTC”). The event was so devastating that FXCM clients accumulated debit balances (money owed to...

Housekeeping, Reminders and Updates--Jan 2015

NATIONAL FUTURES ASSOCIATION On January 15, 2015 the National Futures Association (“NFA”) released Notice to Members I-15-02 (“Notice”) regarding commodity pool operators (“CPOs”) and commodity trading advisers (“CTAs”) exempt from registration and their obligations under NFA Bylaw 1101 and Compliance Rule 2-36(d). Members operating pursuant to an exemption are required to annually affirm the applicable notice of exemption. The Notice provides details pertaining to Commodity Futures Trading Commission (“CFTC”) Regulations, which require the annual affirmation to be completed within 60 days of each calendar year end. NFA Members are required to file the affirmation notice by March 2, 2015. Failing to file the affirmation by the due date will be deemed a notice to withdrawal the exemption thus prompting registration with the CFTC. NFA Bylaw 1101 and Compliance Rule 2-36(d) are also issues in regards to the notice of exemption. A Member will lose its exempt status if the NFA...

NIBA 2015 SoCal Conference Preview

The NIBA is pleased to announce it's Winter Conference is scheduled for February 19, 2015 in Newport Beach, CA. Below you will find a preview from the conference speakers as well as a link to the agenda and registration page: Blu Putnam, CME Group Chief Economist Join Blu Putnam as he presents his 2015 Economic Outlook, covering topics from international GDP growth in China, Japan & the Euro-zone, to emerging markets, oil-challanged countries & US growth and the likelihood of the Fed raising rates in 2015. Click here for a preview of Blu Putnam's session Patricia W. McDonald, Partner, Baker & McKenzie LLP Join Patricia McDonald as she discusses Recent Tax Developments that Affect IBs and CTAs: This presentation will highlight several recent pieces of tax legislation of which IBs and CTAs should be aware and which may impact them personally as well as their relationships with their customers. Click...

NIBA Membership Chairman's Letter

Dear NIBA Members and Supporters, 2015 NIBA Membership: Thank you for your continued support of the only independent organization supporting IBs, CTAs, and APs. Your support, participation, and your investment in your business is what makes the NIBA possible. If you are not a member yet we invite you to join now. With each new member our influence and voice becomes stronger and everyone in the community benefits. Please take a few minutes to join or renew your membership online. I believe membership in the NIBA is the most efficient and effective way for you to expand your business opportunities and professional development. To benefit from your membership to the fullest I encourage you to make an investment of time and effort in NIBA’s activities and become involved in the association. Simply put, what you get out of your membership is directly relative to what you put in. Some of...

Chairman's Letter

Members of the NIBA -- By the time this NIBA Journal is posted, the election for the IIB and CTA/CPO positions on the NFA Board of Directors will be completed. As a registrant myself, I am expecting our elected representatives to work closely with NFA staff to form an effective Board. Each of us is entitled to have an NFA Board on which the individuals work as a team in order to develop and implement regulation which makes sense, is cost effective, allows us to run a successful business and offers sufficient protection to our customers and their funds. The NIBA Board of Directors looks forward to working with all NFA staff and representatives to accomplish these goals, regardless of who wins this election. In December, 2014, membership renewal notices went out to all membership categories. Please renew or join by using the form on the NIBA website or mailing...

By NIBARead article

January 19, 2015

2 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. Question: In the event of a dispute between a member firm and another member is there a medium that NFA provides for resolution? Answer: NFA arbitration is a process where parties present their arguments and supporting evidence before an impartial third party (or panel) who decides how the matter...

By NIBARead article

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