NIBA Journal

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

July 21, 2014

Ask the NFA

“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: I am an IB and have an AP who did their AML annual training late by a couple of weeks. Should I notify the NFA now or wait until we are audited? Answer: There is no specific self reporting...

NFA assessment fee reduction will become effective on October 1, 2014

Notice to Members I-14-18 July 7, 2014 NFA assessment fee reduction will become effective on October 1, 2014 Effective October 1, 2014, NFA's assessment fee will be $.01 per side for futures and options contracts. The new rate is a 50 percent decrease from the current rate. NFA's Board of Directors believes that, based on recent trends in public trading volume growth, this fee reduction may be sustainable for a few years. Obviously, the trend in trading volume may change, which could either shorten or lengthen the amount of time that this fee can be maintained. For additional information, consult NFA's Interpretive Notice "NFA Bylaw 1301: NFA Assessment Fee Questions and Answers for FCMs" or contact NFA's Information Center (information@nfa.futures.org) at 800-621-3570 or 312-781-1410.

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Important Notice to CPOs and CTAs summarizing the changes to the CPO Form PQR and CTA Form PR that will become effective for the period ending June 30, 2014

June 24, 2014

1 min read

Important Notice to CPOs and CTAs summarizing the changes to the CPO Form PQR and CTA Form PR that will become effective for the period ending June 30, 2014

On June 5, 2014 NFA issued Notice to Members I-14-13, which outlined important changes that were made to CPO Form PQR and CTA Form PR that will become effective for the period ending June 30, 2014. The updated forms will be available in the EasyFile system the first week of July 2014; however, based on feedback from CPO/CTA Members, NFA is providing this email to highlight the specific steps that were amended and/or added. If you have any questions relating to the above changes, please contact Tracey Hunt, Associate Director, Compliance (thunt@nfa.futures.org or 312-781-1284) or Mary McHenry, Associate Director, Compliance (mmchenry@nfa.futures.org or 312-781-1420). Click here to access a PDF detailing the changes

Four Key Items for an Emerging Manager to Grow Their Business

Over the years of meeting emerging managers I have found a common theme among them. They often believe when they start a money management firm, investors will automatically find them and invest. In other words, it is the “I build it and they will come” perspective. The new managers often miss the point; they started a small business. With any business, there are many components to handle including marketing / business development, technology, hiring employees, vendors, compliance and operations. Similar to most businesses, marketing / business development is often the key to grow or slow the business. In this article we discuss several points related to marketing / business development. Marketing / Business Development Managers often believe once they hang their shingle and start their business, investors will automatically flock to them. However, it should be understood, unless the manager has deep pockets or some large initial investors, they will...

Skewing Your Diversification hosted by Mark Shore

Skewing Your Diversification is an internet talk show on alternative investments hosted by Mark Shore. The show covers many topics of alternatives with a special focus on managed futures, hedge funds, commodities, currencies and futures. Stay tuned for more episodes and lots of great guests! Sunday nights the show is live-streaming at 9pm ET on www.btfd.tv To view past episodes, go to the Skewing Your Diversification page here.

CTA Insights: Sugar Creek on Discretionary Fundamental Agriculture Trading

We at Sugar Creek Investment Management, LLC believe that capturing fundamental alpha in agriculture requires in-depth knowledge about the underlying commodities, such as how they are produced, priced, traded, and consumed. We also believe that one cannot back-test discretionary fundamental agriculture trading and that forecasting positive returns is a function of qualitative judgment made on the trading specialist’s ability to manage risk/reward in a practical manner in respect to their trading discipline and market focus.  This trading philosophy is just one of many but it is where we feel we have an edge and it is an approach that we believe is most suitable for trading in the commodity space. Critical to all of this is filtering fundamentally unique trading opportunities and grading out the true risk/ reward potential in a trade. Idea generation and market know-how are a prerequisite in the discretionary commodity trading space. We have found that...

A Compliance Perspective on Managed Futures

As investors look to diversify their investment portfolio, one option is trading of derivative contracts, including futures and options on futures.  However, as the normal investor may not have much knowledge or experience trading derivatives, many investors choose the route of managed futures.  Traditionally, there are three ways in which an investor can pursue this opportunity:  a broker assisted account, an individual managed account, or a pooled investment vehicle.  To gain a better understanding of a particular firm, a customer can research a firm via NFA’s BASIC system found on NFA’s website, www.nfa.futures.org.  This system allows a potential customer to research many aspects of the firm:  what type of business they can conduct, their location, any disciplinary actions taken against a firm, and owners and directors of the firm.  Once a firm is selected and the investor determines that they do not want a self-directed account, they must decide on...

July 8-NIBA/DePaul University Co-Sponsored Event

On the afternoon of July 8, 2014, the NIBA will present its first co-sponsored event with DePaul University in Chicago. Two panel discussions and a Networking Reception are included in the afternoon’s program. Registration is required. Click to Register The first panel will discuss the effect of CFTC Reg. 1.22 on your relationship with your customers. FCM implementation of Reg. 1.22 means that customers will have shorter timeframes in which to meet their margin calls. Although this regulation is scheduled to go into effect over the course of 2014, several FCMs have already began to transition by making the required changes to margin procedures in phases. This panel of industry experts, including the NFA, will help you understand the requirements and prepare your clients for the changes to come over the next few months. Turnkey Trading Partners will moderate a panel made up of Mike Coglianese, CPA, Jeff Henderson, Henderson-Lyman...

Chairman's Letter

Dear Members: Communication, communication, communication....the key to success in our industry. It can take many forms -- and this month you can take part in three of them at the NIBA. July 8 -- Our co-sponsored program at DePaul University (LINK HERE) is the place to learn about the changes CFTC Reg. 1.22 will bring for your customer relationships in the coming months. NIBA LinkedIn -- Did you know the NIBA LinkedIn Group has more than 1,000 members? Members meet up regularly, post and read news from all over the industry. Ask NFA -- Our newest feature lets you ask the NFA about anything from registration to audits. You simply submit your question, and the NIBA will ask the NFA directly. No individual names or firm names are identified, and you get answers. Also this month: The CME Group has announced a “netting” policy with regard to market data fee...

Housekeeping, Reminders, and Updates

NFA Registration Update Effective June 1, 2014, NFA imposed a $1,000.00 late disclosure filing fee for members who fail to disclose or updateregistration records involving prior and/or current disciplinary matters. All disciplinary matters involving members and APs are considered properly disclosed if registrations are updated prior to NFA discovering them.  Non-disclosure of disciplinary actions will result in the $1000.00 fine. The NFA rule can be read here. CPO Reminder – Financial Statements must comply with GAAP (Generally Accepted Accounting Principles) NFA has recently been identifying and advising CPOs with regard to making sure their financial statements are in compliance with GAAP.  As a reminder to all CPOs, organizational costs must be expensed as incurred rather than capitalized and amortized over a period of time.  Feel free to give us a call if this requires further explanation. FCM Updates and Reminders FCMs must now make the following information available on its...

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