NIBA - Celebrating 35 Years

NIBA Journal

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

7 min read

Legal Updates for IBs, FCMs and Other CFTC Registrants

While most of the attention in the futures industry has been focused upon the new swaps regulatory framework, the Commodity Futures Trading Commission (“CFTC”) and the National Futures Association (“NFA”) have adopted several new rules governing a variety of other activities. This article discusses some of these new rules, as well as current and upcoming changes related to NFA audits of Member firms. CFTC Adopts Transaction Recordkeeping Rules The CFTC has adopted new recordkeeping rules for registered firms regarding: (1) oral communications that lead to the execution of transactions in commodity interests and (2) written communications that lead to the execution of transactions in commodity interests or related cash or forward transactions. These rules apply to different categories of market participants, depending on the type of communication and transaction. The final rules became effective on February 19, 2013, however, affected registrants have until December 21, 2013, to comply with the...

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2 min read

IB Certified Audits—Reporting Requirements to Keep In Mind

After a busy audit season that included many new rules implemented by NFA and CFTC, we would like to share some reminders and insights. Use of Online Payment Systems If you are an IB trading Forex and use an online bill payment service such as Paypal, there is an accounting issue we have run into. Balances that are maintained in these accounts are not considered current. They must be considered a “non-current asset” on the balance sheet. Therefore, the balances in those accounts cannot be included in the Net Capital Computation. FCM Trading Accounts Balances maintained in a Futures Commission Merchant trading account not being traded at its value will be considered a security deposit (that is if no other security deposit has been made). Therefore, 50% of the balance is considered a “non-current asset” and hence, cannot be used in the Net Capital Calculation. Equity Withdrawal Restrictions Although this...

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MF Global Updates
2 min read

Series of Settlements Moves Ball Forward for MF Global Commodity Customers

A number of settlements between three MF Global administrators and JP Morgan Chase has opened the door for substantial distributions to be made to former commodity customers of the US futures commission merchant. Several conditions must be met before the settlements become effective, but those conditions are foreseen to be met around August 1, 2013. The trustee for the U.S. futures brokerage is currently in the process of making distributions to bring 4d / domestic futures customers from 80% to 89% of their claim amount and 30.7 / foreign futures customers from 5% to 18%. Once the settlements become effective and projected payments are made between the estates, further distributions should be able to bring 4d / domestic futures customers to about 96% and 30.7 / foreign futures customers to about 80% to 85%. If the conditions to the settlements are all met as projected, the latter distributions would likely...

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NIBA Briefings
2 min read

Letter from Paul Georgy, GIB Representative to NFA Boards of Directors

Dear NIBA Members, It is not my intention to be the bearer of bad news, but managing an IB in 2013 will have even more challenges. The impact of Dodd-Frank is trickling down. It will impact us as the CFTC continues to develop new rules, and the NFA must assure they are implemented. A few rules we should all be aware of that will affect how we do business includes the “taping rule” which takes effect on December 21, 2013. This change will impact larger IBs which generate more than $5 million in revenue over 3 years. Another change which affects all of us is the amount of time in which margins calls have to be met before the FCM will receive a capital charge. The old fashion way of sending checks via US Mail may not be quick enough to meet FCM requirements. It may be beneficial to prepare...

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Focus on the Membership
4 min read

Eagle Way Capital LLC | April 2013 NIBA Focus on the Membership

Profile Questionnaire Firm Name: Eagle Way Capital LLC Year Founded: 2009 Number of Brokers: 3 Primary Registration Category: We are an independent IB, futures ad forex. We are also a CTA, currently with a single managed account program that operates either as a forex or currency futures program. NIBA Member Since: 2012 Address (City, State): 152 Chambers Street New York, NY 10007 Total Number of Branch Offices & Locations: Main Office—Lincroft NJ; Branch 1—NYC; Branch 2—Bayonne NJ Other Registrations: Dan Uslander is a registered rep of a securities broker dealer, but Eagle Way Capital has no other registrations. NFA Reg #: 0403226 Primary Markets Traded: FX and precious metals How did you get started? I started at the CBOT in 1979; migrated to the NYMEX in 1983 and have been in NYC ever since. How did the firm get started? We wanted to create an IB with a strong FX/Metals...

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MF Global Updates
6 min read

Corzine Blasted in MF Global Autopsy

Courtesy The Wall Street Journal Jon S. Corzine, the former New Jersey governor who revved up risky trading as chief executive at MF Global Holdings Ltd., deserves much of the blame for the firm's 2011 demise, according to a bankruptcy trustee's report released Thursday. The report mentioned Mr. Corzine's name a total of 284 times—an average of more than once per page—and concluded that he and his management team engaged in "negligent conduct." The 174-page document, filed shortly after midnight Thursday in a federal bankruptcy court by former Federal Bureau of Investigation chief Louis J. Freeh, represents the most thorough look into management's role in MF Global's failure—and the toughest yet on Mr. Corzine. The findings in the report could help decide how much money Mr. Corzine and others potentially have to pay to settle private cases from MF Global customers and creditors in coming months. Those settlement talks are...

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Focus on the Membership
1 min read

2013 USDA Prospective Plantings Report Now Available

The CME Group's 2013 USDA Prospective Plantings Report Market Outlook presentation is now available on archived video and power point slides: View Presentation  View PPT Slides  Additional Resources from the CME: Short-Dated New Crop Options Fact Card (PDF) Short-Dated Grain Options Gaining Traction Nearly Two-Thirds of Corn Belt Still in Drought Dry Soils Raise Cautionary Flag Over Crop Outlook April, May Key to Grain, Soybean Market Direction Why USDA Reports Matter to Ag Markets   The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

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3 min read

FCM Responsibilities for Introducing Brokers' Communications with the Public

FCM Responsibilities for the Review and Approval of their Guaranteed Introducing Brokers' Communications with the Public Recently, NFA has experienced a sharp increase in the number of promotional material submissions to NFA's Pre-review Program by Guaranteed Introducing Brokers ("GIBs") that have not first submitted the material to their Guarantor FCM for review and approval. In some cases, the Guarantor FCM has specifically directed its GIB to forward the material to NFA prior to its own review. In other cases, the GIB has submitted the material to NFA without the Guarantor FCM's knowledge. Since Guarantor FCMs are required to supervise the activities of their GIBs, including approving all GIB promotional material, the Guarantor FCM should review this material before the material is sent to NFA's Pre-Review Program. The purpose of this notice is to remind Member FCMs of their supervisory responsibilities with respect to GIB promotional material and communications with the...

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Marketing
1 min read

Ask the Experts: The 2013 USDA Prospective Plantings Report

The March 28, 2013, USDA Prospective Plantings report will have a major impact on agricultural markets, providing the first survey-based indication of the expected plantings for the 2013 season. In anticipation of this report, please join us as experts from CME Group and Thomson Reuters discuss acreage expectations and the current market outlook. When: Wednesday, March 27 2:30 p.m. CT Where: CME Group Auditorium 20 South Wacker Drive Chicago, IL 60604 -or- Attend it online! Webinar topics will include: Lanworth outlook on US 2013/2014 corn and soybean acreage 2012/2013 South American review International trade overview: exports, stocks, and demand 2013 crop weather outlook and residual effects of the drought Global long term production trends Opportunities with Weekly and Short-Dated New Crop options Speakers: Dr. Corey Cherr Product Manager, Agriculture Research Thomson Reuters Commodities Research and Forecasts Gavin Maguire Agriculture Markets Columnist Thomson Reuters Tim Andriesen Managing Director, Agricultural Products CME...

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MF Global Updates
3 min read

J.P. Morgan, Trustee for MF Global Reach Pact

J.P. Morgan Chase & Co. has reached a settlement that will return an estimated $546 million to MF Global Holdings Ltd. customers, likely bringing an end to a major chapter in customers' effort to recover money from the securities firm's 2011 collapse. J.P. Morgan, the trustee for the failed company's brokerage unit, and lawyers representing customer plaintiffs in the case filed their settlement agreement after finalizing terms in recent days, according to a person familiar with the process. Under terms of the settlement, filed in court Tuesday, J.P. Morgan is set to pay $100 million to reimburse customers, while also releasing claims it had on $417 million in MF Global funds that it had previously returned to the trustee representing customers, James W. Giddens. J.P. Morgan also is returning $29 million related to agreements including an MF Global credit facility. J.P. Morgan is expected to incur an expense of about...

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