NIBA Journal

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

July 19, 2012

Effective Date of NFA Financial Requirements Section 16 and the Related Interpretive Notice - FCM Financial Practices and Excess Segregated Funds/Secured Amount Disbursements

Notice to Members I-12-14 July 18, 2012 Effective Date of NFA Financial Requirements Section 16 and the Related Interpretive Notice - FCM Financial Practices and Excess Segregated Funds/Secured Amount Disbursements The Commodity Futures Trading Commission (CFTC) has approved NFA Financial Requirements Section 16 and the related interpretive notice entitled FCM Financial Practices and Excess Segregated Funds/Secured Amount Disbursements. As described below, NFA Financial Requirements Section 16 and the related interpretive notice impose new requirements on FCMs with respect to customer segregated funds and secured amount funds accounts and require reporting of specific information regarding financial and operational information on a monthly or semi-monthly basis. The CFTC has also approved a minor amendment to NFA Financial Requirements Section 4, which codifies the requirement that any FCM that violates CFTC Regulation 30.7 is deemed to be in violation of an NFA Requirement. These requirements are effective September 1, 2012. Although this Notice...

Frequently Asked Questions - Trading Program Performance Calculations and Presentation by CTAs with Client Assets held at Peregrine Financial Group, Inc.

July 17, 2012 Frequently Asked Questions - Trading Program Performance Calculations and Presentation by CTAs with Client Assets held at Peregrine Financial Group, Inc. As a result of the enforcement actions taken by NFA and the CFTC against Peregrine Financial Group, Inc. (PFG), and the firm's subsequent bankruptcy filing, NFA has received a number of questions from CTAs regarding how to calculate and present performance information for Trading Programs with client managed accounts that had trading positions and other assets held at PFG at the time of these actions. NFA is issuing this notice to address those frequently asked questions. 1. All of my managed client accounts were held at PFG. The exchange-traded open positions in those accounts were liquidated at the direction of PFG's clearing firm. I have not had control over the forex positions since July 10, 2012 and have been unable to liquidate any of those positions....

Important Message for Customers of Peregrine Financial Group and Peregrine Asset Management - Updated on July 12, 2012

July 15, 2012

2 min read

Important Message for Customers of Peregrine Financial Group and Peregrine Asset Management - Updated on July 12, 2012

FROM THE NATIONAL FUTURES ASSOCIATION. View Original Posting here. ---------------------------------------------------------------------------------------------------------------------------- On July 9, 2012, National Futures Association took an emergency enforcement action against Peregrine Financial Group, Inc. (PFG), an NFA Member futures commission merchant (FCM) and Forex Dealer Member (FDM) and Peregrine Asset Management, Inc. (PAM), an NFA Member commodity trading advisor (CTA) and commodity pool operator (CPO) which is closely affiliated with PFG. NFA took this action because NFA believes that PFG failed to maintain adequate funds in segregated accounts. The shortfall exceeds $200 million. In addition, PFG has filed false reports and has falsified bank records. It is NFA's understanding that almost all open customer positions at PFG have since been liquidated and that PFG will be generating accurate account statements as soon as possible. On July 10, 2012, the Commodity Futures Trading Commission (CFTC) filed an injunctive action in Chicago, and as a result, the court has...

July 13, 2012

1 min read

NIBA Statement on PFGBest Failure

On Thursday July 12th 2012, Melinda Schramm, Founder and Chairman of the NIBA was iin Washington, DC to discuss with CFTC official issues surrounding the collapse of PFG including orderly liquidation of customer positions. "The NIBA is stunned and outraged by the apparent actions of PFG and its owner. The NIBA supports a thorough investigation into the apparent fraud and deceptions, and if warranted, the prosecution of those involved," she said. Ms. Schramm added that, "The NIBA is continuing to work with the CME Group, the FCM community and other industry leaders to assure our customers that the industry is stable, and to help craft solutions to prevent failures such as this and that of MF Global, from ever reoccurring."

By NIBARead article

CFTC reportedly plans client-fund protection in wake of allegation

July 12, 2012

1 min read

CFTC reportedly plans client-fund protection in wake of allegation

From the FIA SmartBrief today: The U.S. Commodity Futures Trading Commission is set to adopt safeguards for client funds in the wake of a shortfall allegation against Peregrine Financial Group and the collapse of MF Global Holdings, sources said. The regulator is also expected to approve a rule intended to hold executives at futures brokers responsible for customer funds. Full article at: Bloomberg, Reuters The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

PFGBest Brokers: Make Sure You Have Ownership of Your Domain Name

As we go through the failure of PFGBest less than a year after MF Global, I wanted to alert brokers and GIBs in particular, to make sure you have ownership and access to your domain name. Being able to transfer your domain name in an emergency can help keep your email and website hosting up and running in the event of a crisis such as MF Global and PFGBest. Why does an FCM have control of my domain name? In the past, many FCMs tried to provide website and email hosting and support as a benefit to doing business with that FCM. In doing so, the FCM registered the domain name on behalf of the brokers. Unless ownership of the domain was transferred directly to the broker, it typically stayed registered to the person registering the domain name, typically the FCM. What is the impact of losing control of my...

MF Global payouts could take six years

Source: cattlenetwork.com The complex pursuit of the missing $1.6 billion in segregated customer funds lost by bankrupt broker MF Global could take up to six years to sort out, with full payback to customers unlikely, a top futures industry official said. The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

New Filing Requirements - Segregated Investment Detail Reports

Notice to Members I-12-11 June 27, 2012 New Filing Requirements - Segregated Investment Detail Reports Pursuant to NFA Financial Requirements Section 8, effective July 2, 2012, all NFA Member FCMs that hold customer futures and option segregated funds and/or foreign futures and foreign options secured amount funds will be required to file the Segregated Investment Detail Report (SIDR) as of the 15th (or the following business day if the 15th falls on a weekend) and the last business day of each month. The report is due by 11:59 P.M. Eastern time on the business day following the 15th and last business day of each month. The first SIDR under this requirement will report the information as of close of business on July 16, 2012 and must be filed by 11:59 P.M. Eastern time on July 17, 2012. SIDR requires an FCM to provide the following information as of the reporting...

Guidance to NFA Member CPOs and CTAs that Operate or Advise Pools Pursuant to an Exemption under CFTC Regulation 4.13(a)(4)

Notice to Members I-12-09 June 22, 2012 Guidance to NFA Member CPOs and CTAs that Operate or Advise Pools Pursuant to an Exemption under CFTC Regulation 4.13(a)(4) On February 24, 2012, the CFTC issued final rules amending CFTC Part 4 Regulations to rescind the exemption from registration available to CPOs offering certain qualifying pools under CFTC Regulation 4.13(a)(4). Although Member CPOs that currently operate a pool(s) pursuant to a 4.13(a)(4) exemption may continue to operate the pool pursuant to that exemption until December 31, 2012, those CPOs must determine whether the 4.13(a)(4) exempt pool qualifies for an exemption from registration under CFTC Regulation 4.13(a)(3) or whether the CPO will become subject to CFTC Part 4 reporting and disclosure requirements for that pool subsequent to December 31, 2012. Similarly, any CTA that advises a 4.13(a)(4) exempt pool pursuant to an exemption under CFTC Regulation 4.14(a)(8)(D) may only continue to advise that...

Trustee Report Apparently Indicates Trustee Close to Recovering Sufficient Assets to Make Non-Insider Customers Whole if CFTC Rules Upheld

MF Global Updates

June 11, 2012

3 min read

Trustee Report Apparently Indicates Trustee Close to Recovering Sufficient Assets to Make Non-Insider Customers Whole if CFTC Rules Upheld

On June 4, 2012, the MF Global Inc. ("MFGI") trustee released his first six month report on the SIPA liquidation of MFGI. In the report, the trustee detailed recoveries the trustee has already achieved and also prospective recoveries on behalf of both MFGI's proprietary accounts and the segregated asset pools for MFGI's former customers. A CFTC rule provides that in the event of shortfall an FCM's firm assets go to make up the shortfall, this would mean that MFGI's proprietary assets would be allocated to make up any extant shortfalls in the segregated asset pools of MFGI's former customers. Creditors will argue that this rule is invalid and a court decision will be necessary to determine if it is upheld. An analysis of the trustee's report seems to indicate that he is close to recovering sufficient assets to make up the current shortfall and thus make all public customers whole...

Page 94

NIBA Journal

Effective Date of NFA Financial Requirements Section 16 and the Related Interpretive Notice - FCM Financial Practices and Excess Segregated Funds/Secured Amount Disbursements

Frequently Asked Questions - Trading Program Performance Calculations and Presentation by CTAs with Client Assets held at Peregrine Financial Group, Inc.

Important Message for Customers of Peregrine Financial Group and Peregrine Asset Management - Updated on July 12, 2012

NIBA Statement on PFGBest Failure

CFTC reportedly plans client-fund protection in wake of allegation

PFGBest Brokers: Make Sure You Have Ownership of Your Domain Name

MF Global payouts could take six years

New Filing Requirements - Segregated Investment Detail Reports

Guidance to NFA Member CPOs and CTAs that Operate or Advise Pools Pursuant to an Exemption under CFTC Regulation 4.13(a)(4)

Trustee Report Apparently Indicates Trustee Close to Recovering Sufficient Assets to Make Non-Insider Customers Whole if CFTC Rules Upheld

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