NFA Files Proposed Amendments with CFTC
Commentary by Bob Zwirb
The National Futures Association ("NFA") filed three separate proposed amendments with the CFTC in regard to: (i) NFA Financial Requirements Section 8 ("Additional Information Requests"), (ii) NFA Registration Rule 201 ("Registration Requirements and Procedures") and Rule 203 ("Registration Fees"), and (iii) NFA's Interpretive Notice entitled "Compliance Rule 2-30(b): Risk Disclosure Statement for Security Futures Contracts."
The amendments to Financial Requirements Section 8 add a substantially open-ended requirement that each registered FCM and forex dealer member for which NFA is the DSRO must file such financial, operational, risk management and other information as is required by NFA. The amendment does not otherwise specify what information the NFA might require or set a time period for delivery.
The amendments to NFA Registration Rules 201 and 203 are technical changes regarding fees paid by floor trader firms.
The amendments to the Compliance Rule 2-30(b) require the risk disclosure statement reflect the new settlement process that is to be used by OneChicago, LLC.
Note that the amended risk disclosure statement will require new documents.
See: Amendments to Financial Requirements Section 8; Amendments to Registration Rules; Amendments to Risk Disclosure Statement.
Commentary
The amendments to Financial Requirements Section 8 appear to be related to NFA and the CFTC's efforts to enhance customer protections in the wake of the failures of two prominent FCMs, MF Global and Peregrine Financial, and dovetail with the CFTC's recent issuance of a final rule for that purpose. See Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations 78 Fed. Reg. 68506 (Nov. 14, 2013). In stating that their purpose is to enhance NFA's risk management tools by providing its managers and examination staff with a complete summary of all information that NFA has determined is important to understanding the risk profile and operations of FCMs and FDMs, NFA acknowledges that "affected firms will need to devote more resources to complete their regulatory filings because of the newly required information."