As your industry advocate, the NIBA provides many services which help your business stay in compliance with NFA regulations. “Ask the NFA,” is the way you can ask questions about those regulations and compliance requirements without having to call NFA directly. Just email us at nfacomments@theniba.com and we will get the answers for you. Please keep in mind the purpose of this contact is to keep the lines of communication between the NFA and NIBA members. This month’s questions were selected from those submitted by NIBA members. The answers were supplied by NFA staff.
Q: What is the time frame that I need to notify NFA if one of my customer's trades bitcoin futures?
A: Any introducing broker (IB) that solicits or accepts orders in virtual currency derivatives must notify NFA immediately by amending the firm-level section of its annual questionnaire. This system is only accessible by authorized users. See Notice to Members I-17-29.
Q: If my firm is offering bitcoin futures what additional regulatory requirements will I be subject to?
A: Outside of updating the annual questionnaire as outlined above, there are no additional regulatory requirements solely applicable to virtual currency derivatives. However, NFA Member IBs should understand all of their regulatory obligations including risk disclosure, supervision, and the use of promotional material. NFA encourages IBs to regularly visit the IB Regulatory Obligations page of NFA's website.
Q: What information is available to customers or potential customers in relation to virtual currency derivatives?
A: Given the significant volatility in the underlying virtual currency market, NFA issued an advisory to remind investors that, just like any other speculative investment, trading futures on virtual currencies, including Bitcoin, has certain benefits and various risks. While futures on virtual currencies must be traded on regulated futures exchanges, trading these products involves a high level of risk and may not be suitable for all investors. See the full advisory on NFA's website.
In addition, the CFTC offers a number of resources regarding virtual currencies on its Bitcoin webpage, including a virtual currency primer, a backgrounder on oversight of and approach to virtual currency futures markets, a virtual currency podcast, a self-certification fact sheet, and a number of customer advisories.
Q: Why is there not an appeals process at NFA for a firm that gets a fine of $10k or less?
A: NFA disciplinary proceedings, including appeals, are covered by Part 3 of NFA's compliance rules. Under NFA's rules, a respondent may appeal an adverse decision of an NFA Hearing Panel to NFA's Appeals Committee by filing a written notice of an appeal with NFA within 15 days after the date of the decision. The notice must describe those aspects of the disciplinary action to which exception is taken and must contain any request by the respondent to present written or oral argument. However, there is no monetary limit for filing an appeal. See NFA Compliance Rule 3-13 for more details about NFA's appeal process.
