On November 9, 2015, Steve Petillo, Mike Burke and I travelled to Washington, DC to meet with members of the Commodity Futures Trading Commission at their offices. Here’s a summary of that meeting as well as the other meetings we had while there.
We brought three issues which were suggested by NIBA members to the attention of Chairman Massad and Commission Bowen. Both Commissioners, along with their staff, told us that monitoring the effectiveness of Regulation 1.35 (Recording Communication that may lead to a Transaction) and Regulation 1.22 (“Residual Interest”) is ongoing. We reiterated that we believe Reg. 1.35 in its final form may not have taken into account revenue numbers from all Introducing Brokers, only from IIBs. Both Commissioners agreed to look at any additional information we are able to provide.
We voiced our support for pushing back the automatic start of next phase of Reg. 1.22, and renewed our request to be part of an impact study regarding this regulation.
NIBA’s third concern was the proposed regulation of automated trading, and how any new regulations might affect our membership. The CFTC has suggested that proprietary traders who use automated strategies and have direct electronic access to the markets, would be required to register with the Commission, and trading firms would be required to keep records of the source code for their algorithms. Exchanges would need to have limits on order sizes in place, as well as the ability to cancel existing orders and would be required to monitor their members’ compliance with any new rules. CFTC proposals are now out for comment, and I would welcome any comments or suggestions from NIBA members.
Ms. Bowen asked us how our members thought the CFTC was doing -- what we thought of them. We told her that we have more hope that this commission understands the value of the IB community to the industry than the previous commission did.
We also met with attorneys Mark Ruddy, and James F. Browne to catch up on various issues they have assisted NIBA with over the past several years. And we met with Commodity Markets Council (CMC), a group whose members include FCMs, exchanges and others in the futures industry. We feel NIBA members have many interests in common with CMC members, and we intend to follow-up on those in 2016.
Steve, Mike and I feel we accomplished at least one of our goals -- to ensure that the CFTC knows who NIBA is and what we stand for. We intend to communicate further regarding the issues discussed and additional issues that concern you -- the membership.
