NIBA Journal

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

January 30, 2013

Technology to Monitor FCM Segregation Requirements

Notice to Members I-13-05 January 30, 2013 Effective Date of Amendments to NFA Financial Requirements Section 4 Regarding Use of Technology to Monitor FCM Segregation Requirements NFA recently amended NFA Financial Requirements Section 4 to require FCMs that hold customer segregated funds under CFTC Regulation 1.20, customer secured amount funds under CFTC Regulation 30.7 or cleared swaps customer collateral under CFTC Regulation 22.2 (collectively "customer segregated funds") to instruct the depositories holding these funds to report the balances in these accounts on a daily basis to a third party designated by NFA. The amendments also provide that a depository must comply with this request in order to be an acceptable depository for customer segregated funds. CME Group, Inc. (CME) has adopted similar requirements for its FCM clearing members. As previously communicated to FCMs, NFA and CME selected AlphaMetrix360, LLC to act as the aggregator of this information. Over the last...

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Reminder: CFTC Regulation 4.27: CTA Reporting Requirements

January 28, 2013

2 min read

Reminder: CFTC Regulation 4.27: CTA Reporting Requirements

In February 2012, the CFTC issued final rules adopting CFTC Regulation 4.27 which, among other things, requires that all CTAs file a Form PR annual report with NFA within 45 days of the calendar year end. The Form PR requires each CTA to report on an annual basis general information about the CTA, its trading programs, the pool assets directed by the CTA and the identity of the CPOs that operate those pools. NFA has provided the Form PR template. The first annual Form PR report will be due by February 14, 2013 for the year ended December 31, 2012 and must be filed electronically using NFA's EasyFile System, which can be accessed at http://www.nfa.futures.org/NFA-electronic-filings/easyFile-CTA-filers.HTML. In order to access the EasyFile System, the CTA's security manager must set up the necessary security settings. Instructions on how to do that can be found on our website. CTA Members should also be...

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Notice of Newly Elected Members to NFA's Board of Directors and 2013 Nominating Committee

January 28, 2013

2 min read

Notice of Newly Elected Members to NFA's Board of Directors and 2013 Nominating Committee

This year there were contested elections in the IB and CPO/CTA categories of NFA's Board of Directors. Newly elected Board members in those categories and a complete list of the members of the 2013 Nominating Committee are as follows. Board of Directors IB Representative: Jeffrey D. Malec Chief Executive Officer and Founding Partner Attain Capital Management, LLC CPO/CTA Representatives: James L. Koutoulas Chief Executive Officer Typhon Capital Management, LLC John L. Roe President Roe Capital Management, Inc. 2013 Nominating Committee FCM Category: Bruce Beatus Assistant General Counsel Bank of America Merrill Lynch Chris Damilatis Vice President ADM Investor Services, Inc. Marc Nagel Chief Operating Officer Dorman Trading, LLC IB Category: Michael T. Burke Chief Executive Officer Highground Trading Group Inc. Rodney W. Dow President The Dow Corporation John C. Jensen President Heritage West Financial, Inc. CPO/CTA Category: Robert J. Amedeo Executive Vice President Altegris Portfolio Management, Inc. Anthony T. Gannon...

Peregrine Scion Aims to Clean the Slate

Six months after Peregrine Financial Group Inc. collapsed in scandal, the son of its disgraced founder is struggling to move forward. Russell Wasendorf Jr., who worked under his now-jailed father at Peregrine for 22 years, is fighting a lawsuit from a group of the firm's former clients, who say he missed signs of wrongdoing. At the same time, the 42-year-old is trying to figure out his own next move. He has relocated with his family from Peregrine's base of Cedar Falls, Iowa, to the Orlando, Fla., area, where he is looking for work as a consultant and considering moving to Australia for a fresh start, says his lawyer, Nick Iavarone. Peregrine, a brokerage handling trades in futures and currencies, filed for bankruptcy protection July 10, a day after the elder Mr. Wasendorf, 64-year-old Russell Sr., attempted suicide and left a confession detailing how he siphoned tens of millions of dollars...

ICE Launches First Indian Rupee Futures at a U.S. Exchange on Jan 22

ICE Futures U.S. announced that it will launch a new cash-settled currency futures contract based on the Indian rupee/U.S. dollar exchange rate on Tuesday, January 22. The ICE rupee contract will be the first futures contract on the Indian currency offered by a U.S. exchange. It offers market participants the ease of doing business in a regulated futures environment for execution and clearing, alongside ICE’s suite of more than 60 currency contracts, which includes the U.S. Dollar Index. The listing of the Indian rupee contract recognizes the increasing importance and integration of India into the world economy and responds to mounting interest in exchange-traded products from institutional and professional traders and money managers, including CTAs and hedge funds. The Indian rupee has grown rapidly to become the sixteenth most traded currency in the world. With approximately $70 billion in turnover a day, this is roughly where the Korean won—then the...

Proposed MF Global Settlements Lay Groundwork for Potential 100% Recovery For All Commodity Customers

On December 21, 2012, the MF Global Inc. ('MFGI') trustee entered into two settlement agreements with affiliates that together, if both settlements are approved and effected, provide a roadmap for potential 100% recoveries for all MFGI's commodity customers. Such 100% recoveries would depend on an elimination of the commodity customer asset shortfall through a combination of recovery of assets from affiliates, offsetting of affiliate claims and reallocation of MFGI's proprietary assets. This would be positive for IBs for a number of reasons. The trustee has entered into two separate settlement agreements, one between MFGI and MFGI's UK affiliate (the 'UK Agreement') and another between MFGI and a number of MFGI's domestic affiliates (the 'US Agreement'). The UK Agreement generally resolves a number of disputes and uncertainties, provides for the UK affiliate to pay MFGI between $500M and $600M, and offsets hundreds of millions of dollars in claims between MFGI and...

Member Obligations Under NFA Bylaw 1101 with Respect to Certain IBs Afforded Temporary Registration No-Action Relief

NFA Bylaw 1101 prohibits an NFA Member from carrying an account, accepting an order or handling a transaction in commodity futures contracts for or on behalf of any non-Member of NFA that is required to be registered with the Commodity Futures Trading Commission (CFTC) as an FCM, IB, CPO, CTA or LTM. Bylaw 1101 by its terms imposes strict liability on any Member conducting customer business with a non-Member that is required to be registered. Effective October 11, 2012, the Commodity Futures Trading Commission (CFTC) afforded certain IBs temporary registration no-action relief. Specifically, the CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) stated, in part, that it would not recommend that the Commission commence an enforcement action against a person for failing to register as an IB where the person's requirement to be registered arises from the person being involved with certain Intercontinental Exchange, Inc. (ICE) and/or New York...

IIB Candidate for NFA BOD | John Alan Vassallo

Information Request Questionnaire Your Name & NFA # John Alan Vassallo 221551 How long have you personally been in the futures industry? 25 years Your 3-sentence Bio: Began working on the NYMEX floor in 1989; moved back to my home town, Dallas, TX, in 1990 to found my IB, Coquest which focuses on energy trading/hedging and managed futures. We now include an OTC brokerage company and a portion of Mega Capital, an IIB focused on managed futures. Your Disciplinary History, if any: None. Professional associations or Industry activities: I have served on the NFA Board for 10 years; NFA arbitrator; NIBA board; Preston National Bank, Dallas board 12 years; IB Advisory Committee; Episcopal School of Dallas Board, IPI (Institute for Private Investors) What do you believe is your greatest personal achievement? In partnership with my wife, our twins - now 10 years old. What do you believe is your greatest...

Coming in 2013: Swap Designated IBs

The Dodd-Frank Act of 2010 amended the definitions of FCM, IB, CPO and CTA to include "swaps." On August 13, 2012, the CFTC published final rule definitions for "swaps", "security-based swaps" and "security-based swap agreement". Therefore, any IBs that are not currently registered but are acting as an IB with respect to swaps subject to the jurisdiction of the CFTC must file to be registered with the CFTC on or before December 31, 2012, and be approved as a swap designated IB Member of NFA. In addition, any person associated with a newly registering IB that engages in activities involving swaps subject to the jurisdiction of the CFTC must register as an Associated Person (AP) and be appointed as a swap designated AP. At this time, there are no proficiency requirements for APs whose activities are limited solely to swaps. Also beginning January 1, 2013, currently registered IBs whose activities...

January 24, 2013 | SoCal Event, Newport Beach, CA

NIBA, CME Group and the NFA will host an afternoon event at Flemings Steakhouse in Newport Beach, California. Date: January 24, 2013 Time: 2:00pm-6:00pm Location: Flemings Steakhouse, Newport Beach The focus of this tri-sponsored event will be the economic and regulatory outlook for 2013. The program includes: “Global Economic Update in this Era of Dissonance” presented by Blu Putnam | Chief Economist for the CME Group. “Regulation Changes in 2013: What Should You Expect?” presented by the NFA. “Getting Full Value from Your NIBA Membership” presented by John Jensen | President of the NIBA | President, Heritage West Financial, San Diego, CA. A Networking and Cocktail Reception will follow the presentations. All registered futures, options, forex and swaps professionals are welcome to this complimentary event, but reservations are required. NIBA membership information will be available. For additional information, contact John, jjensen@hwfi.com. Register Now!

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