registration and proficiency. fcms and ibs dual registration required any firm already...
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Registration and Proficiency
FCMs and IBs
• Dual registration required
• Any firm already fully-registered as both a broker-dealer and an FCM or IB has no additional registration requirements
FCMs and IBsNotice Registration as a Broker-Dealer
• Must be:– Fully-registered with the CFTC as an FCM
or IB
– A Member of NFA
• Register using Form BD-N
• Exempt from duplicative requirements of the Securities Exchange Act
• Not required to be members of NASD
• May not do any other securities business requiring registration
FCMs and IBsNotice Registration as a Broker-Dealer
Broker-DealersNotice Registration
as an FCM or IB
• Must be:– Fully-registered with the SEC as a
broker-dealer– A member of NASD
• Register using Notice Form 7-R
• Exempt from duplicative requirements of the Commodity Exchange Act
• Not required to be Members of NFA
• May not do any other futures business requiring registration
Broker-DealersNotice Registration
as an FCM or IB
Salespeople and supervisors only
need one registration
Money Managers
• Dual registration is not automatically required
Registered Commodity Pool Operators
• SEC registration requirements depend on the amount of securities business conducted
• SEC exemption for “hedge funds”
• CFTC registration requirements may apply if a fund trades even one security futures contract
• No exemption for hedge funds
• Other exemptions may apply
Registered Investment Companies & Hedge Funds
Advisors
• Commodity Futures Modernization Act of 2000 provides exemptions for registered CTAs and Investment Advisers
Registered Commodity Trading Advisors
• SEC registration not required:– Registered with the CFTC as a CTA,– Does not primarily act as an investment
adviser, and– Does not give securities investment advice
to a registered investment company or a business development company
SEC-Registered Investment Advisers
• CFTC registration not required:– Registered with the SEC as an investment
adviser, – Does not primarily give personalized
advice regarding or manage accounts trading regulated futures contracts, and
– Does not advise funds about or make trades for funds in regulated futures contracts
Case StudyRegistration
Proficiency
• Series 3 and Series 7 registrants can qualify through training if registered within six months after security futures contracts begin trading
Proficiency
• NFA / NASD / IFM training program– Web-based– Five modules
• Any other training program that covers the required content
Training must be completed BEFORE engaging in security
futures activities
Member must maintain records showing who
took the training
Proficiency
• Later registrants must qualify through testing:– Series 3, or– Securities exam yet to be determined
Designated Principals
• All FCMs, IBs and broker-dealers must have one or more designated security futures principals (DSFP) to oversee security futures activities– Series 30 for NFA-only Members– Series 4 or 9/10 for NASD members
Designated Principals: NFA (Only) Members
• Current supervisors and persons qualified as branch office managers within six months:– Can qualify through training
• New principals:– Must qualify by testing (Series 30)
Designated Principals: NASD Members
• Current options principals and those who become options principals within six months:– Can qualify through training
• New principals:– Must qualify by testing
(Series 4 or Series 9/10)
Case StudyProficiency
QUESTIONS?