CFTC Proposed Rule: Membership in a Registered Futures Association (Fed. Reg. Version) (with Lofchie Comment)

The CFTC proposed to amend its regulations to require that all persons registered with the CFTC as introducing brokers ("IBs"), commodity pool operators ("CPOs"), and commodity trading advisors ("CTAs") must become and remain members of at least one registered futures association ("RFA"); i.e., the National Futures Association (the "NFA").

Comments Due: January 17, 2014.

Lofchie Comment: If the regulation of futures and swaps progresses along the same line as has the regulation of securities, the NFA will become more an arm of the government than a membership self-regulatory organization. Whether this is a philosophically good thing – to have regulation through a "private" organization that is closely supervised by the government – is an open question. Financial regulation has moved far toward this view so it is hard to imagine a change in course, particularly as passing those "privatized" regulatory responsibilities onto the government would raise the question of how they should be financed.Securities firms have had a long experience with regulation by the NFA's securities-law equivalent: FINRA. For banks that are swap dealers, oversight by the NFA will be something new.

See: 78 FR 67078.