NIBA - Celebrating 35 Years

NIBA Journal

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

7 min read

NIBA Member of the Month: Attain Capital Management

FIRM PROFILE Firm Name: Attain Capital Management Founded: 2002 Number of Brokers: 6 IB Status: IIB NIBA Member Since: 2005 Address (City, State): Chicago, IL Number of Branch Offices: 3 Website(s): AttainCapital.com, AttainFunds.com, managed-futures-blog.attaincapital.com, ibroker.com, isystems.com   NFA Registration Number: 0322102 About the Firm: How did you get started? Do you provide additional services besides brokerage? After experience on the trading floors and with various other futures brokers, partners Walter Gallwas and Jeff Malec decided to set off on their own with the founding of Attain in 2002, focusing initially on opening trading system accounts executed by a team of brokers running TradeStation. From the beginning, we had a strong tie to technology, wishing to show the actual results of 3rd party trading systems which were often touted as having triple digit returns with no risk, or other such unrealistic performance. Our goal was to give clients considering investing in a...

By NIBARead article
3 min read

Ask the NFA

As your industry advocate, the NIBA provides many services which help your business stay in compliance with NFA rules. "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: What IB-relevant rules and regulations apply to the use of a multi-CTA hypothetical composite performance portfolio for use as promotional material? Answer: Any measurement or description of or reference to a composite performance record showing what a multi-advisor account portfolio could have...

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2 min read

Get to Know the Regulators: NFA's Arbitration Department

Although the majority of futures and forex transactions occur without issue, occasionally misunderstandings do happen. When either a broker or customer feels they have been wronged during the course of a transaction, NFA's Arbitration department provides a forum for dispute resolution. NFA's arbitration program is generally cheaper, faster and less formal than civil litigation or other dispute resolution forums. Claimants do not have to refer to statutes and regulations to prove their claims. However, they are responsible for proving that they have incurred a monetary loss and deserve compensation. Arbitration also has fewer procedural requirements than litigation, which is why approximately 30 percent of the parties involved in NFA arbitration proceedings represent themselves. Additionally, NFA Members also can use the program to resolve disputes with other Members and Associate Members. Additionally, NFA now offers mediation services for all claims, regardless of claim amount, free of charge. Mediation frequently saves time,...

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3 min read

Identity Theft Programs

The growth and expansion of information technology and electronic communication have made it increasingly easy to collect, maintain, and transfer personal information about individuals. Advancements in technology also have led to increasing threats to the integrity and privacy of personal information. The Fair Credit Reporting Act of 1970 (‘‘FCRA’’), as amended in 2003, required several federal agencies to issue joint rules and guidelines regarding the detection, prevention, and mitigation of identity theft for entities that are subject to their respective enforcement authorities (also known as the “identity theft red flag rules”). At the time the Agencies adopted their rules; the FCRA did not require or authorize the Commodity Futures Trading Commission (“CFTC”) to issue identity theft red flags rules. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act amended the FCRA to add the CFTC to the list of federal agencies that must jointly adopt and individually enforce...

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2 min read

FCM Public Financial Data and Risk Disclosure—Helping Introducing Brokers make informed decisions

By now, all FCMs are to have made public via their websites certain financial data per CFTC Rule 1.55. This information is important to Introducing Brokers as it makes available to your firm a way to better assess the credit profile of each FCM. Each FCM must have posted: Daily segregation statement for segregated, secured and cleared swap funds Summary capital computation for the most recent 12 months Most recent certified audit report Unaudited 1FR/Focus reports for the most recent 2 months Links to the FCM financial data on the NFA and CFTC website To further enable customers to make informed decisions about FCMs, certain Risk Disclosures must be made available that are more firm specific. The firm specific risk disclosure must include: Firm’s name and contact information Firm’s Principals FCM’s significant activities and product lines and the amount of capital and assets contributed to each Business engaged in on...

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5 min read

Housekeeping, Reminders and Updates

FUTURES COMMISSION MERCHANTS In a July 7, 2014 Notice to Members, the National Futures Association (“NFA”) announced a reduction in the assessment fee paid by futures commission merchants (“FCMs”) Members. The NFA’s Board of Directors approved the reduced assessment fee on May 15, 2014. The reduction is a result of an amendment to NFA Bylaw 1301, which covers dues and assessments of NFA Members. Effective October 1, 2014, the amended paragraph (b) of Bylaw 1301will reduce the assessment fee by fifty percent (50%). Each FCM member will pay, to the NFA, an assessment equal to $0.02 for each commodity futures contract traded on a round-turn basis or $0.01 for each option contract traded on a per trade basis. This fee reduction applies to commodity futures contracts and options contract subject to the rules of the contract market and subject to the rules of a foreign board of trade. The NFA...

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Member Announcements
2 min read

The Arditti Center Executive Risk Management Leadership Series

Wednesday, September 24 (12 to 2 pm): A free lunch with a keynote speaker and presentation by our instructors. Wednesday, October 15 (12 to 2 pm): A free lunch with a keynote speaker and presentation by our instructors. Wednesday, November 12 (8 am to 5 pm): One-day capstone program featuring interactive case studies, a keynote lunch, and a keynote dinner the evening before. Program Summary Developing and maintaining superior performance in corporate risk management, which is both effective in taking high-stakes decisions and fail-safe in times of stress, requires executive leadership. Focusing on the critical areas of risk management infrastructure, strategy and decision-making, this interactive program provides senior leaders with greater understanding of, and essential skills in, risk management leadership practices which have been field-tested across multiple industry sectors. Series Structure Hosted at the DePaul Center in the heart of downtown Chicago (1 E Jackson Blvd), the Executive Risk Management...

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5 min read

AP Agreements: Why Your Firm Needs Them and What They Should Address

In this age of heightened regulatory scrutiny and the ever increasing risk of litigation from former employees and customers, coupled with the need to protect valuable trade secrets, it has become a best practice—if not a legal imperative—for IBs to require associated persons (APs) to enter into AP agreements. AP agreements are designed to help reduce risks to IB employers and clarify expectations with APs. Moreover, without such an agreement, a court may find that an IB has no trade secrets and no ownership of such important information as customer contact lists, marketing strategies or key documents. AP agreements touch on several different areas of law—laws that are prone to shift—and are also subject to a dynamic regulatory environment. Thus, the preparation of AP agreements requires careful attention. However, a carefully crafted AP agreement can help minimize risks to both parties while also establishing the parties’ expectations. In addition to...

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Member Announcements
3 min read

Chairman's Letter

Dear Members - Many NIBA Members are already feeling the effects of CFTC Regulation 1.22 as FCMs begin to phase in the changes to margining customer accounts as enumerated. The so-called "residual interest" provision in the rule, due in November 2014, shortens the three-day period which customers currently have to meet margin requirements. The time period further shortens in four years. The NIBA has vigorously opposed CFTC Reg. 1.22 since it was proposed. Included as part of the sweeping customer protection rules enacted by the Commission as a result of the Dodd-Frank Act and in response to the failures of MF Global and PFG Best, we have argued implementation of this rule could drive our customers, including farmers, ranchers and small hedgers, out of the futures markets by requiring "pre-margining" to maintain their accounts. Pre-margining would eliminate their ability to use futures as a risk management tool due to higher...

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Housekeeping
1 min read

July Housekeeping Items

Upcoming IB Filings: 1-FRs for IBs are due 7/24/2014 for the 6/30/14 filing.  That is 2 days from today (Tuesday July 22)  Please be sure to file this prior to the deadline as there is now a $1,000 per day fine for a late filing Upcoming CTA Filings: In 2013, the NFA amended Compliance Rule 2-46 to impose a quarterly reporting requirement on all CTAs. This filing requires each CTA to report general information about the CTA and its trading programs.  For CTAs who have a 6/30/2014 quarterly filing, the due date is on Thursday 8/14/2014. New CFTC Rules: CFTC Rule 1.55 (j) requires each FCM to provide certain information that is specific to the clearing firm and its business in a new, mandatory FCM specific disclosure document.  According to the CFTC this new FCM d-doc is designed to enable customers to make informed judgments regarding the appropriateness of selecting...

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