NIBA Journal

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

February 25, 2015

Arditti Summer Research Grant Program

The Arditti Center for Risk Management at DePaul University is pleased to announce that it is now accepting proposals for its 2015 Summer Research Grant Program. The program's goal is to encourage practical and innovative research in the field of risk management. In order to promote the Center's research agenda and continue the Arditti legacy, the Center will provide summer funding for two research proposals that have a blend of theoretical and empirical applications. Proposals should be sent as one packet, and contain all three of the following materials: a cover page, a description of the proposal (at most ten pages), and the applicant’s current curriculum vitae. The Arditti Center Research Grant Committee will select a candidate whose proposal most aligns with the Center’s mission of rigorous, practical, and innovative research. The proposal and the curriculum vitae will be the two main sources of information used to evaluate the significance...

Housekeeping, Reminders and Updates

NATIONAL FUTURES ASSOCIATION Commodity Pool Operators The National Futures Association (“NFA”) has modified the EasyFile system for the annual pool financial statements submitted by commodity pool operators (“CPOs”). The NFA announced the changes to the annual pool financial statements in the February 10th Notice to Members, Notice I-15-09. Changes to the annual pool financial statements are effective for financial statements dated after November 29, 2014. EasyFile has been updated to now include a new Cover Page for each pool operated by the CPO. The pool Cover Page includes questions regarding whether the annual report is audited. Additional questions will be required if the CPO Member indicates that the annual report is not audited. The NFA has also added supplemental questions concerning the structure of the reporting pool. The annual pool financial statements are part of the Annual Report that CPO Members are required to distribute to pool participants within 90...

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February 25, 2015

2 min read

"Ask NFA" Question of the Month

I was recently examined by NFA. It appeared like the examiner's exam plan "play book" that did not completely fit my business. Please describe how NFA's examination programs are structured. Specifically, are examination programs designed to review the unique aspects for the different registration types (i.e. FCMs, RFEDs, IBs, CTA and CPOs)? Yes. NFA examination programs are designed to allow for focused examinations of the different registrant types. Additionally, NFA plans each exam so that it's tailored to the unique business operations and risks of the Member. No two Members' businesses are exactly alike – even Members within the same registration category. As a result, no two NFA examination plans are exactly alike. During examination planning and preparation, examiners try to learn as much about the Member and its business operations as possible so that the examination is designed to test areas of risk applicable to that particular firm. The...

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.

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

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...

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CFTC/NFA Response to the Swiss Franc Move

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...

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