NIBA Journal

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

October 23, 2014

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...

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Housekeeping, Reminders and Updates--Oct 2014

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...

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

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...

Chairman's Letter

Dear Members - For the 23th year in a row, this year’s NIBA fall conference was the best one yet! It does seem as if we always think the NIBA meeting we have just finished was the absolutely best one ever. And looking back over the conferences since our first one in May, 1991, it is true. Each meeting addresses the hot topics of the day, highlights new products and services and brings old friends and colleagues together. Thank you to all the speakers, sponsors and supporters for making the September 22 Chicago event a success. Please take a moment to take our survey and let us know what you want to talk about at our next member meeting - southern California in January, 2015. In November, the first phase of CFTC Reg. 1.22 dubbed the “residual interest” regulation will be implemented. Although NIBA President Steve Petillo and I suggested...

NFA Representative Panel Thoughts and Follow Up

At the recent NIBA meeting in Chicago several panel discussions focused on issues affecting the IB, CTA and CPO community. Regulations are always a hot topic for both Independent and Guaranteed IBs, especially at a time when rules are being created by the CFTC. The “Residual Interest Rule” which affects the FCMs net capital requirement as of November 14, 2014 could have a lasting impact on many IBs. This rule requires the FCM to capitalize margin calls older than T+1 (trade day plus 1 day). To meet this new requirement the FCM will likely insist your customers meet their margin calls by wire or ACH, depending on the size of the call. In most cases, sending checks through the US mail will no longer be a viable option. In addition to the issue of collecting margins in a volatile market, the IB should be aware of their FCMs available excess...

NIBA Chicago Conference Videos

Thank you to everyone who made the September NIBA Membership Meeting a success. Over 220 IBs, CTAs and other futures professionals attended a day full of information and ideas on everything from tax issues to new regulation. Thank you to all our panel participants. Every session was presented by an industry expert who graciously shared time and knowledge with NIBA members. The CME Group, primary sponsor for September's Chicago meeting, recorded two of the day's five sessions. The videotapes are available below, and will be a available any time. Details for NIBA's 2015 meetings will be posted on our website, theniba.com within a few weeks. Three locations are currently Melinda Schramm, Founder & Chairman NIBA NIBA Catalysts for Changing Market Trends & Volatility NIBA Big Compliance Issues Panel

2014 NIBA Conference Preview

Floor Tour led by Ron Grossman & William Gallwas – Whether you have visited the trading floor, traded on the floor or passed through the visitors’ gallery, a tour guided by Ron Grossman and William Gallwas is an experience in itself. The trading floor at some point in time (always seems to be 5 years from now) will become history and the NIBA has enlisted two of the best to host an insiders’ guided tour of what was, what is and what is to come of the Chicago trading pits. 8:00 am – CBOT, Sponsored by: ADM Investor Services Compliance for Swaps IBs and CTAs – Jeff Barclay, Panel Leader – Swaps compliance is a hot topic among industry and regulators as legislation has led to registration requirements and regulations which some argue “don’t fit.” This panel of industry experts includes the latest information and perspective from the NFA, as...

NIBA/ DePaul Arditti Center Event | How CFTC Reg. 1.22 Changes your Customer Relationship [Video]

On July 8, 2014, the NIBA and DePaul University's Arditti Center for Risk Management presented an afternoon event on the University campus in Chicago. DePaul recorded the program. The first session, Introduction to the NIBA included a panel discussion of the effect of CFTC Reg. 1.22 on our customer relationships, led by Susan Osmanski of Turnkey Trading Partners. The panel included Mike Coglianese, Michael Coglianese, CPA; Jeff Henderson, Henderson Law Firm; and Dale Spoljaric representing the NFA. A second panel discussed managed futures as an alternate asset class, watch it here.

NIBA/ DePaul Arditti Center Event | Managed Futures: Perspectives on a Growing Asset Class [Video]

Part One Part Two On July 8, 2014, the NIBA and DePaul University's Arditti Center for Risk Management presented an afternoon event on the University campus in Chicago. DePaul recorded the program. The second panel discussed managed futures as an alternate asset class and included moderator Jason Turnipseed, Managed Account Research; Adrian Fleisher, Ten Yard Capital, Paul Sylvia, Aon Hewitt; and Mark Shore, Shore Capital Management and DePaul University. The first panel discussed CFTC Reg. 1.22 and how it changes your customer relationship, watch it here.

Risk Leadership Keynote Lunch, September 24th

The Arditti Center is pleased to announce that Michelle McCarthy will be the September 24th keynote speaker for the Risk Leadership Program. Michelle will discuss how risk management developed in banks, and how it differs when applied to other industries, particularly investment management. She will also highlight elements which derive from strong vs weak risk leadership, eg. risk-aware culture, healthy challenge, transparency, accountability, and reputation risk. The keynote lunch is free and part of the larger Risk Leadership Series. Find out more on the Arditti website, and RSVP for lunch on the Registration Page. Michelle McCarthy is a Managing Director and heads the Risk Management function at Nuveen Investments. Before joining Nuveen in 2010, she served as Chief Risk Officer at Russell Investments. From 2003 to 2009 she was the Chief Market and Operational Risk Officer at Washington Mutual Bank, responsible for measuring and monitoring interest rate risk limits on...

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