NIBA Journal

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

September 17, 2012

Chief Compliance Officer Requirements Become Effective for Certain FCMs on October 1, 2012

Notice to Members I-12-21 September 14, 2012 Chief Compliance Officer Requirements Become Effective for Certain FCMs on October 1, 2012 Effective October 1, 2012, FCMs that are currently regulated by a U.S. prudential regulator or that are also in some capacity registrants of the Securities and Exchange Commission must have a designated Chief Compliance Officer (CCO) under CFTC Regulation 3.3, and that person must also be a listed principal of the firm. In addition, those FCMs will be required to file the CCO Annual Report as of the date of the firm's first fiscal year end after October 1, 2012. This notice contains important information about listing with NFA the firm's CCO as a principal and the filing of the CCO Annual Report. Designating a Chief Compliance Officer If the designated CCO is not a listed current principal of the FCM, the FCM must file a CFTC Form 8-R for...

CFTC faults Peregrine trustee $123 million distribution plan

By Linda Sandler | Bloomberg The Peregrine Financial Group Inc.trustee didn’t complete necessary tests before announcing a plan to distribute $123 million to customers of the defunct futures brokerage, the U.S. Commodity Futures Trading Commission said. The tests were essential because Peregrine collapsed amid a fraud and theft of money by founder Russell Wasendorf Sr., the CFTC said in a filing yesterday in U.S. Bankruptcy Court in Chicago. “The CFTC is in favor of distributing money to the debtor’s customers as soon as is reasonable and practicable,” the regulator said. “Because this case involves allegations of fraudulent books and records of the debtor’s estate, however, the CFTC believes that distributions should be made only after reasonable due diligence to ensure that the data underlying the distribution are reliable.” Peregrine filed for Chapter 7 liquidation on July 10, hours after the CFTC filed a lawsuit accusing the firm and Wasendorf of...

NIBA Trustee Letter

September 10, 2012 Ira Bodenstein, Trustee for PFG Best By Email Only - ibodenstein@shawgussis.com Mr. Bodenstein: I write on behalf of the National Introducing Brokers Association (NIBA). Founded in 1991, the NIBA is a membership association of futures and options professionals registered primarily as Introducing Brokers (IBs). I write with regard to a specific distribution method your office proposed last week in the Peregrine Financial Group (PFG) bankruptcy, Docket Document #147: a proposal to make a bulk transfer of futures customers accounts with an interim distribution of funds, all to a qualified “acquiring FCM.” It seems to us that the time for a bulk transfer has come and gone. Had it happened immediately on or about July 10, 2012, when PFG filed for bankruptcy, customers might have continued to trade, and the terrible situations in which many of the IBs who did business with PFG now find themselves, might have...

National Futures Association announces registration information webinar for swap FCMs, IBs, CPOs and CTAs

September 7, 2012 National Futures Association announces registration information webinar for swap FCMs, IBs, CPOs and CTAs The Commodity Futures Trading Commission (CFTC) recently published its final rule definitions for "swap," "security-based swaps" and "security-based swap agreements." As a result, firms that are not currently registered with the CFTC, but are acting as an FCM, IB or CTA with respect to swaps subject to the jurisdiction of the CFTC, will be required to register. Firms acting as CPOs also are required to register, unless the firm properly claims an exclusion or exemption from registration via NFA's Electronic Exemption System. To help these new swap FCMs, IBs, CPOs and CTAs understand the registration process, NFA will present a webinar on Thursday, September 20 at 11:00 a.m. EST. During this 60-minute webinar, NFA staff will provide an in-depth discussion of the registration process for these new swap intermediaries, outline the regulatory requirements...

NFA Financial Requirements Section 16 - Required Notification of Certain Disbursements from Segregated/Secured Amount Funds and New Requirements Regarding Statement Submitters

Notice to Members I-12-18 August 24, 2012 NFA Financial Requirements Section 16 - Required Notification of Certain Disbursements from Segregated/Secured Amount Funds and New Requirements Regarding Statement Submitters Notification of Certain Disbursements from Segregated or Secured Amount Funds Effective September 1, 2012, any FCM that makes a disbursement or a series of disbursements from its customer segregated funds account(s) or its foreign futures and foreign options customer secured amount funds account(s) that are not for the benefit of customers and that exceed 25% of the FCM's residual interest in either of those funds account(s) based upon the firm's most current daily segregated funds or secured amount funds calculation must comply with the following additional requirements imposed under NFA Financial Requirements Section 16. The FCM is prohibited from making such a disbursement or series of disbursements unless the FCM's CEO, CFO, or a listed principal of the firm who holds a...

NFA Rule Submission Letters

NFA submitted the following rule submission letters to the CFTC: Recordkeeping – Proposed Amendments to NFA Compliance Rule 2-10 » View Letter (PDF) Protection of Customer Funds – Proposed Amendments to NFA Financial Requirements Section 4 To Provide OnLine View-Only Access to FCM Customer Segregated/Secured Amount Bank Account Information » View Letter (PDF) 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.

CME Group | Conference Session Overview

For CME Group, nothing is more important than the confidence customers have in our marketplace and the protection of our customers when using our markets. Earlier this year, CME Group launched the CME Group Family Farmer and Rancher Protection Fund, which is currently accepting applications from farmers, ranchers and cooperatives who traded in CME Group markets and suffered losses from the failure of PFG. As an IB, you can help your clients sign up for the program and find additional information at www.cmegroup.com/clearing/family-farmer-fund.html Since the failure of MF Global and Peregrine Financial Group (PFG), CME Group, in conjunction with the NFA, CFTC and others in our industry, have put in place and are in the process of implementing a number of new requirements designed to deter another firm from misusing customer funds. Enhancements that are already in place include: Daily segregated funds reports now required from all FCMs. Bimonthly SIDR...

FCM Risk Assessment - Trust and Verify

The recent insolvencies of MF Global and PFGBest, along with the near miss of Knight Capital, have sent customers scrambling to confirm the safety of their property and the financial health of their brokers. Prior to October 2011, most futures customers never gave the solvency of their FCM a second thought. Customers now find themselves on the hunt for the canary in the coal mine. In a financial world fraught with rogue traders, Ponzi schemers and high frequency meltdowns, what is the best approach for detecting a Corzine or Wasendorf at your FCM? The quick answer is: there is no quick answer. You must first consider what type of trader you are and on what exchanges you will be trading. There are a number of additional factors to consider, most of which are changing as regulators react to recent collapses. Many reforms are also in the pipeline which may change...

Chairman's Message | August 2012

Dear NIBA Member - Finding the right FCM to clear customer business is the #1 priority of most IBs right now. We know that over 50% of the IBs transferred from MF Global, Inc. have subsequently transferred out of the FCMs to which they were transferred - many because of a “bad fit.” Sources are reporting that up to 50% of the IBs and CTAs who did business with PFG have not found a new clearing FCM a full six weeks after the firm’s demise. As registered industry professionals - IBs, CTAs or APs, you have many responsibilities and obligations to your clients. One of those responsibilities is to assure that the relationship you have with the FCM clearing your customer’s transaction is the the best relationship for your customer’s needs. Of course, this also help you develop and implement a good business plan for your firm. NIBA’s FCM Members...

Economic Outlook - Macro, Micro and Agricultural

David Oppedahl is a business economist in the economic research department at the Federal Reserve Bank of Chicago, where he directs the Chicago Federal Reserve District’s survey of agricultural banks on agricultural land values and credit conditions. He regularly briefs the Chicago Federal Reserve on the state of our agricultural economy, including rural development, and other microeconomic research. The results of Mr. Oppedahl’s research are used to publish the Chicago Fed’s quarterly agricultural publication - AgLetter. David will present an economic outlook session at the NIBA September 12 program which incorporates current data with an explanation of the slow economic growth since the Great Recession of 2007-2009. Included is a discussion of the role the Federal Reserve has played in stimulating the economy and current developments in the agricultural economy. Mr. Oppedahl can be contacted at david.oppedahl@chi.frb.org, He invites questions and suggestions which he will address at the NIBA meeting....

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