CFTC Issues Proposed Rule to Require IBs, CPOs and CTAs to Become Members of a Registered Futures Association

The CFTC proposed a rule 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") become and remain members of at least one registered futures association ("RFA"); i.e., the National Futures Association, since it is the only RFA.

Current CFTC Rules 170.15 ("Futures Commission Merchants") and 170.16 ("Swap Dealers and Major Swap Participants") require FCMs, SDs and MSPs to become members of an RFA, subject to an exception for certain notice-registered brokers or dealers; however, there is no mandatory membership requirement for other registrants. According to the CFTC, due to the unique nature of swap transactions, it may be possible for certain IBs, CPOs or CTAs to serve clients without becoming members of the NFA under these current rules. The CFTC's proposed rule is intended to avoid this outcome.

See: CFTC Notice of Proposed Rulemaking of Membership in a Registered Futures Association; CFTC Press Release.