NFA Issues Guidance on Bylaw 1101 Compliance for Pending Introducing Brokers

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On December 27, National Futures Association issued guidance for NFA members carrying accounts, accepting orders or handling transactions from an introducing broker (IB) whose NFA membership is pending in reliance upon no-action relief granted by the Commodity Futures Trading Commission. On October 11, CFTC staff granted no-action relief for market participants that become obligated to register as IBs solely based on their activity in IntercontinentalExchange and New York Mercantile Exchange products that are in the process of transitioning from swaps to futures and options contracts. To be eligible for the CFTC staff’s no-action relief, the market participant must have completed and filed a registration application with NFA on or before December 31.

Pursuant to NFA’s guidance, a member carrying an account, accepting an order or handling a transaction from these pending IB members will be considered in compliance with NFA Bylaw 1101 if the member obtains a written representation from the pending IB indicating that it meets the conditions set forth in the applicable CFTC no-action letter. The NFA member’s relief from Bylaw 1101 requirements will expire on the date that the IB becomes an approved NFA member or five days after the pending IB member receives notice that it may be disqualified from registration under the Commodity Exchange Act.

NFA Notice I-12-37 is available here.

 

Topics:  Brokers, CFTC, Compliance, NFA, No-Action Relief, Swaps

Published In: Administrative Agency Updates, General Business Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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