NIBA Journal

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

November 19, 2014

Member of the Month | Michael Coglianese CPA, P.C.

NIBA Member Spotlight on Michael Coglianese CPA, P.C. Founded: April 1987 NIBA Member Since: 2009 Address: 125 E. Lake Street, Suite 303, Bloomingdale, IL 60108 Branch Offices: 2 Web: cogcpa.com About the Firm:  Michael Coglianese CPA, P.C. was founded in 1987.  Before that, Mike Coglianese was working at NFA as an In-Charge Compliance Auditor.  Sitting across the table during the compliance and financial audits and investigations of NFA Members, Mike realized that the Futures Industry was lacking accountants who were experienced with the intricacies of the regulatory world.  He set out to fill that void. Over the past 28 years, his firm and the services offered have grown to assist the Futures and Alternative Investment industry with their year-end certified audit requirements, Track Records and Performance Capsules, Regulatory Registration and Compliance, and Tax Preparation. Michael Coglianese holds a Bachelor of Science in Accounting from Purdue University and is a Certified Public Accountant,...

By NIBARead article

November 19, 2014

5 min read

The CFTC Revisits Dodd-Frank Rulemakings, and Responsiveness Shines Through

On Monday, November 3, 2014, the U.S. Commodity Futures Trading Commission (CFTC) held an open meeting to consider three proposed rule amendments addressing the residual interest deadline (CFTC Rule 1.22), recordkeeping requirements for commodity interest and related cash or forward transactions (CFTC Rule 1.35), and forward contracts with embedded volumetric optionality (CFTC Products Release ).  In passing the amendments, the CFTC, acting under a new chairman, demonstrated a willingness to re-visit prior rulemaking under the Dodd-Frank Act.  The meeting began with opening statements by Chairman Massad and Commissioners Wetjen and Bowen. Chairman Massad vocalized support of the amendments and stressed that the proposals were only minor adjustments to former rules that would “fine-tune” various procedures to ensure that as regulation increases, commercial parties can continue to operate profitably.  Chairman Massad stated, “[t]he changes we are proposing today help ensure that as we regulate the potential for excessive risks in these...

By NIBARead article

November 19, 2014

2 min read

Highlighting Important Changes Happening to BASIC

As part of its ongoing commitment to customer protection, National Futures Association (NFA) recently made changes to its display of futures commission merchant (FCM) financial information on its Background Affiliation Status Information Center (BASIC) online tool. BASIC is a comprehensive database of registration, disciplinary and financial information about derivatives firms and salespeople. It contains the disciplinary history and other background information of more than 150,000 individuals and 10,000 firms that currently, or have been, involved in the derivatives industry. Since 2012 when NFA enhanced the amount of information it provides to investors performing due diligence of firms, BASIC has displayed a variety of futures commission merchant (FCM) financial data. At this time, NFA made publicly available three reports on FCMs' percentage of customer segregated funds, secured amount funds and cleared swaps customer collateral held in cash, which are updated on a monthly or semi-monthly basis. However, in November 2013, the...

2014 NIBA Board of Directors Nominations

NIBA BOD Nominations The National Introducing Brokers Association nominates the following association members for positions to the Board of Directors. Nominees For Additional 3 Year Term: Ralph Preston: Asoociated Person, Heritage West Financial, Inc. (HWFI), San Diego, CA. Ralph has served on the NIBA Board of Directors for the past three years. He is the Committee Chairman, Service Providers and Joint Chairman, southern California membership meeting. Ralph has been registered with HWFI since 2003 and has been a principal of the firm since 2005. If no additional names are nominated, the above are deemed elected within 15 days of this notice. To nominate an additional candidate: i) the candidate must have been a NIBA member for at least 2-years prior to this notice ii) the candidate must have served on a NIBA committee or worked on a NIBA program or project such as the conference or newsletter iii) the candidate...

Market Data Fees - An Opinion

As the NIBA has been reporting since last November, the CME Group is discontinuing the current market data waiver effective January 2015. For many members of the NIBA and traders at large, the financial impact could be devastating. The Zaner Group, a longtime member of the NIBA located in Chicago, is a well established IB. They are a good example of what I consider to be a traditional IB model. The knowledgeable brokers have personal relationships with their clients and offer a variety of services. Matt Zaner, CEO of Zaner Group, shared a breakdown of costs associated with the platforms and data they currently use together with his expected expenses after the waiver is discontinued. The results are staggering. he facts: An office with a dozen brokers can expect an increase in expenses for market data alone of over $15,000 per month. All firms will see costs go up. Zaner...

Big Trends in Big Data:

Reprinted with permission from DePaul Business Exchange.  © 2014 by DePaul University Driehaus College of Business. All rights reserved.   Ninety percent of the data that exists in the world today has been created since 2010.   The consulting firm IDC predicts that by 2020 this digital universe will expand by a factor of 300, from 130 to 40,000 exabytes.   How much is that? One exabyte has 18 zeros behind it.   In people terms, that’s more than 5,200 gigabytes of data for every man, woman and child on Earth by 2020.   Consumers are the main source of this growth, creating more than two-thirds of the data in cyberspace through videos watched, photos shared, social media messages sent and purchases made online. Add to this a mountain of machine-generated data from smartphones, tablets and networked computers, plus supermarket scanners and other sensors, and what has come to be...

Master of One: The Specialist CTA

Over the past 10-20 years the client/broker relationship has fully evolved from a transactional one to a consultative one and appropriately to the client’s benefit.  Where commissions and fees used to be major elements of the sales cycle, now portfolio construction and access to alpha are key selling points toward attracting and maintaining investors.  This combined with an expanding universe of managed futures investments to choose from have brokers and advisors, now more than ever, charged with sourcing new and differentiated Commodity Trading Advisor (CTA) strategies and then building balanced, stable portfolios out of them.  Given this evolution and for ease of communication I will use the terms ‘portfolio advisor’ or just ‘advisor’ to indicate the person building the multi-CTA portfolio and ‘CTA’ to indicate the constituent Commodity Trading Advisors that are combined to form the portfolio. In this article we will: Define two basic types of CTA strategies Discuss...

By NIBARead article

October 23, 2014

3 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 over the last two months. The answers were supplied by NFA staff. Question 1: "In the eyes of the NFA ..is it ok for a CPO to compensate any IB to sell it's product through fee share? (In order to maintain the client relationship.) If so, what would the best verbiage to use?" Answer: A CPO...

By NIBARead article

October 22, 2014

16 min read

Housekeeping, Reminders and Updates--Oct 2014

New Self-Executing Registration Relief for Delegating CPOs On October 15, 2014, the Division of Swap Dealer and Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (“CFTC”) issued CFTC Letter No. 14-126 (“Letter 14-126”). Letter 14-126 grants self-executing no-action relief from the requirement to register as a commodity pool operator (“CPO”) under the Commodity Exchange Act (the “CEA”) to persons that have delegated certain of their responsibilities as a CPO (“Designating CPO”) to another person that is registered as a CPO (“Designated CPO”), such that the Designated CPO will serve as the CPO of the pool in lieu of the Delegating CPO. In essence, Letter 14-126 is a progression of the relief previously addressed in CFTC Staff Letter No. 14-69 (“Letter 14-69”), which granted relief under essentially the same circumstances as Letter 14-126 but pursuant to a formal request for relief (as opposed to self-executing relief). In addition to...

By NIBARead article

October 22, 2014

10 min read

Recent Changes to the U.S. Tax Laws and Their Impact

Four years ago in 2010, Congress enacted new tax legislation that only recently came into effect. This article briefly discusses two additional U.S. tax regimes arising from such new tax legislation: (i) the 3.8% net investment income tax plus the additional 0.9% Medicare payroll tax; and (ii) the 30% withholding tax under the Foreign Account Tax Compliance Act. These additional tax regimes have the effect of increasing the effective tax rate of individual taxpayers, and creating additional administrative responsibilities for withholding agents with respect to identifying payees, withholding taxes on amounts paid to payees, and reporting payee information to the relevant tax authorities. NET INVESTMENT INCOME TAX / ADDITIONAL 0.9% MEDICARE PAYROLL TAX Summary Net Investment Income Tax. The 2010 Affordable Care Act (the “Act”) imposed a new 3.8% tax beginning on January 1, 2013 on certain net investment income of individuals, estates and trusts that have income above certain...

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