As part of the reauthorization of the Commodity Futures Trading Commission (CFTC) in May 2008, Congress amended the Commodity Exchange Act to require forex solicitors, account managers and pool operators to register with the CFTC as Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) or Commodity Pool Operators (CPOs) and become Members of National Futures Association.
The CFTC recently published its proposed forex rules, including the registration requirements. Although the final rules and the date they will become effective have not yet been published, National Futures Association (NFA) has prepared this brief summary of the current proposed forex registration requirements to give firm and individual applicants a basic understanding of the registration process.
All forex firms registering as a Guaranteed Introducing Broker, Commodity Trading Advisor or Commodity Pool Operator must meet the following requirements:
Completed Online Registration Forms:
Applicants must file a completed 7-R form through NFA’s Online Registration System (ORS). NFA has published an ORS Users Guide and a tutorial on its website that provide step-by-step instruction for the most common registration tasks.
Additional Requirements for Introducing Brokers:
Applicants registering as Guaranteed Introducing Brokers must submit a completed Guarantee Agreement (Form 1-FR-IB Part C) from a Forex Dealer Member (FDM).
Additional Requirements for Commodity Trading Advisors and Commodity Pool Operators:
Before they can begin soliciting customers, CTAs and CPOs must submit a Disclosure Document to NFA for approval. The Disclosure Document must be completed in accordance with NFA Compliance Rule 2-41.
Any individual applying as an Associated Person (AP) or Principal of a Forex IB, CTA or CPO must file a completed 8-R form through NFA’s Online Registration System (ORS).
All individuals who solicit retail off-exchange forex business or who supervise that activity will be required to take and pass two exams. One is the National Commodity Futures Examination (NCFE or Series 3), which covers on-exchange futures trading theory, terminology, and regulation. The second exam is a new exam, Series 34. This hour-long exam consists exclusively of forex-related questions. NFA has published Study Guides for both exams in the Registration section of its website (www.nfa.futures.org).
Both exams are currently available and are administered by the Financial Industry Regulatory Authority (FINRA). The testing application form (U10) can either be downloaded or completed online athttp://www.finra.org/Industry/Compliance/Registration/CRD/FilingGuidance/index.htm.
NFA requires all individual applicants to submit fingerprint cards, which are sent to the Federal Bureau of Investigation (FBI) to determine if the applicant has a criminal record. NFA can only accept and process a complete FBI Applicant card. These cards are available by contacting NFA’s Information Center at 800-621-3570. Applicants are encouraged to submit more than one set of fingerprints with their application to avoid delays in obtaining additional sets if necessary for processing.
NFA offers a fingerprinting service for NFA applicants at the Chicago office (300 South Riverside Plaza, Suite 1800) between the hours of 8:30 a.m. and 4:00 p.m. for $15 (cash, check or money order). In order to use NFA’s fingerprint service, visitors must be pre-registered in the building’s visitor registry. Visitors should contact NFA’s Information Center (either by phone at 312-781-1410 or send an email to firstname.lastname@example.org) to pre-register their name and date of visit so they can receive access to NFA’s offices on the 18th floor. NFA recommends that visitors pre-register at least a day prior to their visit.
All individuals being fingerprinted will be required to present two forms of identification, one of which is a valid picture ID issued by a government agency, in order to verify the identity of the person being fingerprinted. NFA now submits digital images of fingerprints to the FBI for criminal background checks. Results are received in three days or less, and in some cases within several hours, resulting in a faster and more efficient registration process.
CFTC Registration Fees:
$200 non-refundable registration fee for each IB, CTA or CPO
$85 non-refundable registration fee for each principal and/or AP of an IB, CTA or CPO
NFA Membership Dues:
$750 non-refundable annual dues for each IB, CTA or CPO