National Futures Association
Registration Information for Swap FCMs,
IBs, CPOs and CTAs
Today’s Presenters
Yvette Christman, Senior Manager, Business Systems &
Information Center
Shamika Carr, Manager, Audits
Alex Vorro, Communications Specialist
Webinar Agenda
• Filing requirements for FCMs, IBs,
CPOs and CTAs
• The Registration Process
• The Application Process
Background
• The CFTC published final definitions for "swap",
"security-based swaps" and "security-based swap
agreements" on August 13
• Firms that are not registered but acting as a
swaps FCM, IB or CTA must register by October 12
• Firms acting as CPOs are required to register by
October 12 unless they have claimed an exemption
Associated Persons
• Any person associated with a firm newly
registering as a swap FCM, CPO, CTA or IB
that engages in activities involving swaps
subject to CFTC jurisdiction must register as an
Associated Person (AP)
Associated Persons
• Newly and currently registered FCMs, IBs,
CPOs and CTAs whose activities include swaps
subject to the jurisdiction of the CFTC must be
approved as an NFA Member swaps designated
firm
Associated Persons
• Registered APs whose activities involve
swaps and are associated with an FCM, IB,
CPO or CTA must be approved as a swap
designated AP by NFA
• No Member may be approved as a swap firm
unless at least one of its principals is registered
as an AP and is approved as a swap AP
Registration Applications
• Currently registered firms and individuals can
log in to NFA’s ORS to complete:
o Form 7R for the firm
o Form 8R for the APs
Filing Requirements
• Filing requirements for registration are:
o A completed online Form 7R (which
includes the NFA Membership application)
o A non-refundable application fee of $200
for an IB, CPO or CTA; $500 for an FCM
o An online Form 8R, fingerprint card and
$85 fee for each principal
Filing Requirements
• If you apply for registration in multiple
categories, you must pay the application fees
for each category
Membership Dues
• $750 for an IB, CPO or CTA
• $1,500 for an FCM whose exchange is its
DSRO or $5,625 if NFA is its DSRO
• Membership dues are paid in only one
category—the category to which the highest
dues apply
Who needs to be listed as a principal?
• Job titles
• Ownership
• Job duties
Job Titles
•
Proprietor of sole proprietorship
•
General Partner of a partnership
•
Manager or Managing Member for an LLC
•
Board of Directors
•
President
•
CEO, COO, CFO, CCO
•
Any person in charge of a business unit subject
to CFTC regulation
Ownership
•
Any entity that directly owns 10% or more of any class
of the Member’s equity securities, other than nonvoting securities
•
Any entity, other than non-voting securities, who has
contributed 10% or more of the Member’s capital
•
Any individual who directly or indirectly owns 10% or
more of any class of the Member’s equity securities,
other than non-voting securities
•
Any individual who has contributed 10% or more of
the Member’s capital
Individual
100% Owner
Holding Company
50% Owner
NFA Member Firm
Both the Holding Company and the Individual would need to be
listed principals of the NFA Member Firm.
Indirectly owns 50%
of Member
Job Duties
• An individual with controlling influence over
the Member’s activities
•
An individual who has control to make
decisions that materially affect the firm’s
futures, options, forex or swaps business
without any sort of supervision
Criteria for Being Listed as a Principal
•
The individual’s ability to control a Member’s business
activities
•
The individual’s formal title or position with the
Member
•
The individual’s financial or ownership interest in the
Member
Who has to register as an AP?
•
An individual who solicits orders, customers or
customer funds on behalf of any NFA Member firm or
someone who supervises other APs who are actually
doing the soliciting
•
Anyone who is in the supervisory chain-of-command
and not only to persons who directly supervise
•
Each firm must have at least one principal registered
as an AP
Proficiency Requirements
•
APs currently must pass a proficiency exam: National
Commodity Futures Examination (Series 3)
•
NFA has proposed rule amendments offering relief
from the proficiency requirements for APs who
exclusively deal in swaps
•
CFTC has not yet acted upon this proposal
Branch Office Registration
•
A branch office is any location, other than the
firm’s main business address, where a Member’s
APs are conducting business
•
Each branch office must have a registered branch
office manager
FCM Applicant Process
• An FCM must:
o Maintain a minimum capital requirement
of $1 million
o Provide a financial statement certified by
a CPA not more than 45 days old, or a
certified statement as of the date not
more than one year old and an
uncertified statement not more than 17
business days old
FCM Applicant Process
• An FCM must provide a Source of Assets
Letter, copies of bank statements and
copies of various compliance procedures
IB Applicant Process
• An IB must maintain a minimum capital
requirement of $45,000
• NFA usually recommends $50,000
IB Applicant Process
• An IB must provide a financial statement
certified by a CPA not more than 45 days
old, or a certified statement as of the date
not more than a year old and an uncertified
statement not more than 17 business days
old or an unaudited financial statement not
more than 17 business days old
IB Applicant Process
• If the firm files an unaudited financial
statement, it will be subject to an audit
within six months of being registered
IB Applicant Process
• An IB also must:
o Provide a Source of Assets Letter that
describes the source of the firm's capital
and the letter must state that capital will
be used for the purpose of operating the
business
o Provide copies of bank statements and
copies of various compliance procedures
CPO/CTA Applicant Process
• There is currently no applicant process for
CPOs and CTAs
• CPOs and CTAs must submit a disclosure
document to NFA before soliciting customers
unless they have claimed an exemption
• The disclosure document must be reviewed
and approved by NFA before the firm can
provide it to its customers
NFA Publications
• Self-Examination Questionnaire
• Disclosure Document Guide
• Promotional Material Guide
• Regulatory Requirements Guide
Additional NFA Resources
• Registration Tutorial Videos
• Podcasts
• Webinars
• Workshops
Contact NFA
NFA Information Center
(312) 781-1410
(800) 621-3570
Information@nfa.futures.org
Questions?