NIBA Journal

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

CME Group Market Data Policies Update
Operations
February 14, 2014
6 min read

CME Group Market Data Policies Update

In November, 2013, the CME Group announced changes to market data license agreements and schedules. The resulting increase in user fees significantly affect all NIBA members. NIBA members voiced several concerns surrounding the changes and the Executive Board of Directors presented them to the exchange. On February 14, 2014, the CME Group released an update to the market data policies. One of our major issues has been addressed: the definition of non-professional. Non-professionals are now defined to include certain small business entities such as LLC, trusts, etc., that are: (i) not affiliated with a Professional, and (ii) whose primary business purpose is not trading. There is also a limit in the number of trading terminals allowed to be used at the entity to qualify as a non-professional. This definition is important because so many IB customers are organized as LLCs, trusts or other legal entities, all of which seemed to...

By NIBARead article
CME Group/NFA/NIBA - March 6 - Newport Beach, CA
Member Announcements
February 14, 2014
2 min read

CME Group/NFA/NIBA - March 6 - Newport Beach, CA

March 6, 2014: 2:00pm - 7:00pm Sessions Begin: 2:30pm Marriott Newport Beach There will be two information sessions followed by a networking reception with the speakers, CME Group, NFA representatives and the NIBA. There is no cost for this event - all futures industry participants are invited, but you must register in advance. Session 1: Why Smart Money Invests in Managed Futures - CME Group's Initiatives Going Forward: Presented by David Lerman, Senior Director, Client Development & Sales, Asset Managers, CME Group Session 2: Compliance Issues featuring the NFA: Presented by Patricia Cushing, Director Compliance, National Futures Association and Matt Reynolds, AIF(R), CRCP - McGladrey LLP NIBA Networking: Cocktails, good company and conversation. Details regarding registration and information: >Register Now! This is the NIBA's second winter meeting in southern California. Last year's event was at capacity. You do not need to be a NIBA member to attend, but membership is...

By NIBARead article
Suitability: At the Corner of Series 3 and Series 7
February 7, 2014
8 min read

Suitability: At the Corner of Series 3 and Series 7

Recent changes to FINRA’s suitability rule may have implications for the futures industry. The futures industry has never had a suitability rule. In 1978, the U.S. Commodity Futures Trading Commission (CFTC) considered adopting one but decided against it, opting instead to impose on a Series 3 broker a robust duty to disclose the risks and let the customer decide whether to engage in futures trading.1 When the NFA adopted Compliance Rule 2-30, it followed the CFTC’s lead: “Once … the customer has been given adequate disclosure, the customer is free to make the decision whether to trade futures and the Member is permitted to accept the account.” 2 In contrast, the bedrock obligation of a Series 7 securities broker has been the duty to make suitable recommendations. The responsibility for determining whether a particular security transaction is right for a customer is placed on the broker—not the customer. Indeed, in...

By NIBARead article
Request for Comments – CPO/CTA Capital Requirement and Customer Protection Measures-Comments Due by April 15, 2014
MF Global Updates
January 30, 2014
7 min read

Request for Comments – CPO/CTA Capital Requirement and Customer Protection Measures-Comments Due by April 15, 2014

NFA regularly reviews the continued effectiveness of its regulatory requirements. Over the past three years, NFA has issued 26 Member Responsibility Actions (MRAs), and 92% of those MRAs were against CPO and/or CTA Members. Most of these matters involved misuse of customer funds (including one CPO that improperly used pool funds because it had insufficient assets to operate as a going concern) and/or misstating net asset values and/or performance information. In light of these actions, NFA is reviewing the current regulatory structure applicable to CPO and CTA operations. In particular, NFA is looking at ways to strengthen the regulatory structure governing CPO operations to provide greater protection for customer funds. Additionally, NFA is exploring ways to ensure that CPOs and CTAs have sufficient assets to operate as a going concern. NFA’s Executive Committee approved the issuance of this request for comments to solicit CPO and CTA Member input on the...

FinCEN Issues an Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies
Member Announcements
December 23, 2013
1 min read

FinCEN Issues an Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies

On December 4, 2013, the Financial Crimes Enforcement Network (FinCEN) issued an advisory announcing that the Financial Action Task Force (FATF) had updated its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member FCMs and IBs should review this Advisory to ensure that their AML programs have the most current information on FATF identified jurisdictions with AML/CFT deficiencies and revise their AML programs accordingly. A copy of the Advisory is available through FinCEN's website at: http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-A008.html

By NIBARead article
CME Group Market Data Fee FAQ Clarification
NIBA Briefings
December 16, 2013
1 min read

CME Group Market Data Fee FAQ Clarification

CME Group Market Data Fee FAQ In response to the NIBA, the CME Group Market Data Team has submitted the following clarification to its November 12, 2013 notice regarding market data fees: Question: I am an end user, with one software application that has order routing capabilities to multiple broker/FCMs. Do I have to pay the market data fees for each broker/FCM connection? Answer: No, market data fees are assessed per device, not per the number of order routing connections. The CME Group has indicated it will notify us promptly of any additional clarifications or changes to the original announcement.

By NIBARead article
CFTC Rule Change Proposal
December 16, 2013
2 min read

CFTC Rule Change Proposal

The Commission is currently asking for comments on a proposed rule change. They wish to add a section to require that each person registered as an IB, CPO or CTA become and remain a member of a registered futures association, such as the NFA. Under CFTC Reg. 4.14(a)(9) a person is not required to register as a CTA if it does not: (i) direct any client accounts; or (ii) provide commodity trading advice based on, or tailored to, the commodity interest or cash market positions or other circumstances or characteristics of particular clients. This exemption from registration primarily applies to CTAs who only provide advice to the general public, usually in a newsletter and not to specific clients. The Commission requires registration of these entities currently, but does not require membership in the NFA. In response to a member inquiry, the NIBA contacted the NFA. They explained that the CFTC...

By NIBARead article
Peregrine Financial Trustee Seeks to Return $41 Mln to Clients
MF Global Updates
December 13, 2013
2 min read

Peregrine Financial Trustee Seeks to Return $41 Mln to Clients

Peregrine Financial Group's bankruptcy trustee plans to return up to $41 million to former customers of the failed futures brokerage in the second payout since the firm collapsed 17 months ago. Court-appointed trustee Ira Bodenstein is seeking to return about 7 percent, or $27.5 million, to Peregrine customers who traded on U.S. exchanges, according to court filings. In the first payout last year, the group, which comprised the bulk of the firm's clients, received back about 30 percent of the money they had in accounts when Peregrine failed. Clients who traded on foreign markets would get back about 45 percent more of their money, or $13.5 million, in the second payout, court documents show. They received back about 40 percent of their missing money in the first payout last year. A hearing on the trustee's motion is set for Dec. 18. "Just in time for the holidays, former customers of...

By NIBARead article
Chairman's Letter for December 2013
NIBA Briefings
December 12, 2013
3 min read

Chairman's Letter for December 2013

0 0 1 415 2372 Gate 39 Media 19 5 2782 14.0 544x376 Normal 0 false false false EN-US JA X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman";} Chairman’s Article: Dear Members: This month’s issue of the NIBA newsletter focuses on the topic on everyone’s mind -- the CME Group market data fee increases. Not surprisingly, none of our members are happy about it. Some even say that added to the industry problems of the past two years, this could be the last straw for their business. On December 2, 2013 the NIBA Executive Board of Directors took your comments and suggestions to a meeting with the CME Group market data team. The points we emphasized are: The size of the fee increase as announced. The definition of ‘professional user’ versus ‘non-professional user.’ The...

By NIBA
Class Action Lawsuit Filed Against U.S. Bank on Behalf of IBs that Introduced Business to PFG
Member Announcements
December 12, 2013
1 min read

Class Action Lawsuit Filed Against U.S. Bank on Behalf of IBs that Introduced Business to PFG

On November 11, 2013, a class action law suit was filed against U.S. Bank, one of the largest American banks, on behalf of introducing brokers that did business with PFG Best. The action, filed in the Northern District of Illinois and docketed as Fintec Group, Inc. v. U.S. Bank, N.A., aims to recover for IB losses resulting from PFG’s collapse, including unpaid commissions, security deposits and potentially other amounts. One of the attorneys representing the lead plaintiff in that suit, Larry Landsman, would like to communicate with any IBs impacted by the PFG bankruptcy to deepen his understanding of the circumstances and impact PFG's collapse had on the IBs. Any NIBA members or other such IBs interested in speaking with Larry are encouraged to contact him by e-mail at larry@block-landsman.com or by phone at 312-251-1144.

By NIBARead article
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