National Futures Association

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National Futures Association Registration
Information for Swap FCMs, IBs, CPOs and CTAs
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Todays Presenters Yvette Christman, Senior
Manager, Business Systems Information
Center Shamika Carr, Manager, Audits Alex
Vorro, Communications Specialist
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• Webinar Agenda
• Filing requirements for FCMs, IBs, CPOs and
  CTAs
• The Registration Process
• The Application Process

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• 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

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• 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)

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• 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

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• 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

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• Registration Applications
• Currently registered firms and individuals can
  log in to NFAs ORS to complete
• Form 7R for the firm
• Form 8R for the APs

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• Filing Requirements
• Filing requirements for registration are
• A completed online Form 7R (which includes the
  NFA Membership application)
• A non-refundable application fee of 200 for an
  IB, CPO or CTA 500 for an FCM
• An online Form 8R, fingerprint card and 85 fee
  for each principal

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• Filing Requirements
• If you apply for registration in multiple
  categories, you must pay the application fees for
  each category

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• 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 categorythe
  category to which the highest dues apply

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• Who needs to be listed as a principal?
• Job titles
• Ownership
• Job duties

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• 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

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• Ownership
• Any entity that directly owns 10 or more of any
  class of the Members equity securities, other
  than non-voting securities
• Any entity, other than non-voting securities, who
  has contributed 10 or more of the Members
  capital
• Any individual who directly or indirectly owns
  10 or more of any class of the Members equity
  securities, other than non-voting securities
• Any individual who has contributed 10 or more of
  the Members capital

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Individual
100 Owner
Holding Company
Indirectly owns 50 of Member
50 Owner
NFA Member Firm
Both the Holding Company and the Individual would
need to be listed principals of the NFA Member
Firm.
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• Job Duties
• An individual with controlling influence over the
  Members activities
• An individual who has control to make decisions
  that materially affect the firms futures,
  options, forex or swaps business without any sort
  of supervision

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• Criteria for Being Listed as a Principal
• The individuals ability to control a Members
  business activities
• The individuals formal title or position with
  the Member
• The individuals financial or ownership interest
  in the Member

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• 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

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• 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

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• Branch Office Registration
• A branch office is any location, other than the
  firms main business address, where a Members
  APs are conducting business
• Each branch office must have a registered branch
  office manager

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FCM Applicant Process

• An FCM must
• Maintain a minimum capital requirement of 1
  million
• 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

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FCM Applicant Process

• An FCM must provide a Source of Assets Letter,
  copies of bank statements and copies of various
  compliance procedures

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IB Applicant Process

• An IB must maintain a minimum capital requirement
  of 45,000
• NFA usually recommends 50,000

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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

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IB Applicant Process

• If the firm files an unaudited financial
  statement, it will be subject to an audit within
  six months of being registered

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IB Applicant Process

• An IB also must
• 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
• Provide copies of bank statements and copies of
  various compliance procedures

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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

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NFA Publications

• Self-Examination Questionnaire
• Disclosure Document Guide
• Promotional Material Guide
• Regulatory Requirements Guide

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Additional NFA Resources

• Registration Tutorial Videos
• Podcasts
• Webinars
• Workshops

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Contact NFA

• NFA Information Center
• [phone]
• [phone]
• Information_at_nfa.futures.org

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Questions?