NFA Town Hall on Capital Requirements for CTAs

NFA Board Members James Koutoulas and John L. Roe hosted a virtual Town Hall for NFA members to discuss the protection of customer funds that are managed by CTAs and invested in commodity pools. The NFA is considering imposing capital requirements on CPOs and CTAs as a means to protect customer funds and ensure that CPOs and CTAs operate as going concerns.

The meeting was introduced by Mr. Koutoulas and featured introductory comments on the NFA proposal by Tom Sexton, the General Counsel of the NFA, and a discussion between Mr. Koutoulas and Mr. Sexton. Mr. Koutoulas and Mr. Roe, in addition to being NFA Board members, also are the co-founders of the Commodity Customer Coalition, which represents the interests of investors harmed by the implosion of MF Global.

Sexton said that the NFA is looking for creative solutions to prevent the misuse of customer funds, and indicated that all ideas are welcome, as no new rules have been proposed at this time. He invited interested parties to send comments to the NFA by April 15, 2014.

Koutoulas said that the third-party administration of commodity pools would provide less expensive and more effective protections of customer funds from CPO misuse than would capital requirements. Mr. Koutoulas suggested that interested parties respond to the NFA's request for comments, and that CTAs also consider signing on to the industry comment letter titled "Just Say No to CTA Capital Requirements," which was prepared Kelly Hollingsworth.

See: NFA Proposal.