NIBA Journal

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

January 19, 2015

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...

An analysis of why volatility indexes are relevant

Financial markets are about making decisions in moments of uncertainty. The one certainty one can make is that no one has a crystal ball, nor can anyone predict with certainty what will occur in the future. Although seeking methods to manage portfolio volatility and tail risk may fall out of fashion from time to time based on market sentiment, it should always be utilized as part of the risk management process. Volatility indexes are instruments that may assist in the risk management process. Table 1: VSTOXX® Futures yearly volume and open interest as of October 2014 Source: Eurex Exchange’s monthly statistics In the capital markets when participants ask if a product is still relevant is often when the product finds itself out of favor. Sometimes that is when the product is at its lowest point just before it becomes relevant again and back in favor. This was exactly the situation...

NIBA Comment Letters to CFTC Regulation 1.22 and 1.35 Proposed Amendments

On behalf of the NIBA members, the board of directors have submitted the following comment letters to proposed amendments to CFTC Regulation 1.22 and 1.35. NIBA Comments on CFTC Reg. 1.22 (Residual Interest): We agreed with the proposal to eliminate the automatic margin deadline change in 2018. We also agreed that a comprehensive study of whether this rule is enhancing any customer protection and is practical and affordable for the brokerage community as a whole. We once again urged that the NIBA be in on the discussions at the Commission re: the study and any further changes to this rule. Download NIBA Comment Letter CFTC Reg 1.22 (PDF) NIBA Comments on CFTC Reg. 135 (Recording - including oral conversations): We agreed that CTAs in general should be exempt from this rule because of the nature of their relationships with their customers' transaction decisions. We also reiterated that the threshold for...

Mr. Koutoulas Needs to Prove His Allegations

On December 31, 2014, the John Lothian Newsletter published Mr. Lothian’s own opinion regarding the allegations James Koutoulas has made and publicized about the nominations of public directors by the NFA Board’s Executive Committee. Mr. Lothian was right on point. In a complaint filed with the CFTC, Mr. Koutoulas claims the NFA violated its own rules when it improperly nominated public directors to its Board of Directors in January, 2014. The NFA has denied the allegations, and went to the extent of hiring outside counsel to investigate the charges. That report, issued in February 2014, “concluded that all of the incumbent public directors had been nominated in accordance with NFA’s Articles.” During his “Town Hall” webcast on December 19, 2014, Mr. Koutoulas, repeated the accusations, including stating that the behavior of members of the NFA staff was “heinous,” according to Mr. Lothian, and called for resignations and staff retirements. The...

NIBA Endorsements for NFA Board of Directors Election

Members of the NIBA: IB and CTAs join the NIBA for many reasons. One of the most important is to remain current on issues that impact the day-to-day operation of our businesses. The NFA impacts every aspect of our business. That is the main reason it is important to have representatives that stand up for us, and contribute valuable insight, recommendations and methods to the regulatory process. This NFA election is only the second time Board positions have been contested. The NIBA Board of Directors (BoD) believes the trend will continue, and contested elections will become the norm. As a result, NIBA members have asked the BoD to make recommendations for the contested positions. This is the first time in our history that the NIBA has recommended nominees for NFA Board positions. To ensure the recommendations accurately reflect members opinions, BoD members (excluding non-registrants and FCM members) voted. The BoD...

Chairman's Letter

Dear Members: NIBA held its annual elections in November. Ralph Preston (Heritage West Financial, Inc.), was elected to a second three-year term on the Board of Directors (BoD). The BoD appointed Jerry Nolan (County Cork, LLC) to a one-year term, and the following Association officers were elected for the coming year: Steve Petillo (Coquest, Inc.) - President Mike Burke (HighGround Trading, LLC) - Vice-President Shane Stiles (Gate 39 Media) - Vice-President, Media and Communications Buck Haworth (Born Capital Financial Services, LLC) - Treasurer Ryan Griffeth (PostRock Brokerage, LLC) - Secretary John Jensen (Heritage West Financial, Inc.) - Past President All members of the Board can be contacted by email at the addresses listed on the NIBA website. NFA Elections are in progress now. This year there are contests for both the CTA/CPO and IIB positions. You will find the position papers of each candidate, in his own words, in today’s...

NIBA Announcement--NFA Board of Directors Election Position

The NIBA is pleased to announce that it will be endorsing candidates in both the IIB and CTA/CPO categories in the NFA Board of Directors elections. NIBA has reviewed all position papers submitted to the association by the candidates and will publish its opinion and formal endorsement of the candidate(s) this Thursday December 18th.

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NFA Board of Directors CTA/CPO Candidate Position Paper-Kalb

December 15, 2014

5 min read

NFA Board of Directors CTA/CPO Candidate Position Paper-Kalb

NFA Board of Directors Candidate Statement Brendan R. Kalb, General Counsel & Managing Director, AQR Capital Management, LLC This is a critical time for our industry. We face a number of new challenges that have resulted from extraordinary instances of malfeasance and profound regulatory changes of the last few years. While regulators have taken a few positive steps, more needs to be done to ensure customers and our markets are better protected. If elected to NFA’s Board, my mission will be clear: to restore and preserve confidence in a rapidly changing futures market by ensuring that NFA fulfills its obligations as a regulatory body, acting swiftly via effective and intelligent self-regulation. I pledge to pursue effective regulation and hold all market participants and intermediaries to the highest levels of integrity. I plan to deliver on those promises by demonstrating effective leadership, promoting best practices, and pursuing thoughtful solutions to market...

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