Introduction to NFA

National Futures Association (National? Futures? Association), referred to as NFA. The National Futures Association (NFA) is a self-regulatory organization in the futures industry established on 1976 according to the provisions of Section 17 of the American Commodity Exchange Act, and it is a non-profit membership organization. Article 17 of the Commodity Trading Law originates from Chapter III of the Commodity Futures Trading Commission (CFTC) Law 1974, which stipulates the registration of futures associations and CFTC's supervision of futures professional self-regulatory associations. On September 22nd, 198 1, CFTC accepted NFA as a "registered futures association", and on June 22nd, 1982, 10, NFA officially started to operate.

The initial purpose of National Futures Association (NFA) is to establish the ethics of futures and other markets and protect the interests of traders and investors. Every individual and company that provides trading services to customers in the US futures and foreign exchange markets must be registered with the US Commodity Futures Trading Commission (CFTC) and become a member of the NFA. At present, NFA has about 4,300 members and 50,000 associate members (representatives of NFA member companies).

The main function of NFA is to make NFA members strictly abide by the federal laws and the rules formulated by CFTC and implement strict management. The NFA also has its own rules to monitor brokers' code of conduct towards traders and investors, so as to prevent traders and investors from cheating.

The responsibility of NFA

Audit and supervision members must meet the financial requirements of NFA;

Formulate and implement rules and standards to protect the interests of customers.

Arbitration of futures-related disputes

To become an NFA member, futures brokers, referral brokers, commodity trading consultants and commodity joint venture fund managers can all become NFA members.

In addition, any institution or individual registered in CFTC can become a member of NFA, including all futures exchanges and any other futures business, as long as the applicant meets the requirements of NFA membership. Since August 3 1, 1985, according to the commodity trading law, employees of NFA members are required to register as "related persons" of NFA. CFTC also authorizes NFA to handle the registration applications of floor brokers and floor traders. According to NFA regulations, all FCM, IB, CTA and CPO must become NFA members.

Supervision and operation of NFA

1, financial requirements

One of the first tasks of NFA is to set low financial standards for FCM and IB members, audit and implement according to this standard, and obtain financial reports from these members and analyze them. At present, NFA rules do not put forward similar requirements for other members, such as chief procurement officer and certified tax accountant. Although NFA can audit FCMs as a member of the exchange, NFA entrusts this function to the exchange. The financial standards required by NFA are basically the same as those required by CFTC and futures exchange, but the determination of special financial items such as margin level is still decided by the exchange.

2, industry ethics standards

The professional ethics standards implemented by NFA include those specified in section 17 of the Commodity Exchange Law, such as prohibiting fraud, manipulation and deception, and prohibiting unfair and improper transactions. The NFA also prohibits black market transactions and requires members to formulate a supervision system for employees and free accounts. These are similar to the requirements of CFTC and exchange. In addition, NFA requires CPO and CTA members to abide by the special regulations of CFTC and exchange. The NFA has also formulated the "know your customer" rule, which requires members to fully understand the situation of new customers before customers open futures accounts, and provide futures trading risk disclosure.

3. Members and associate members

Any institution or individual registered in CFTC and futures exchange can become a member of NFA unless the registrant or exchange fails to meet the membership conditions (for example, CFTC orders it to cancel its registration). According to the Commodity Exchange Law, employees of NFA members also need to be registered as "joint members" of NFA, and these individuals must meet the qualifications required by NFA like members.

4. Membership review

First, NFA staff will conduct a preliminary review, and finally the NFA membership committee will make a decision at the hearing. If the president has reason to believe that the applicant is not qualified to become a member or is not suitable to be registered as a joint member of the NFA, the applicant or the membership Committee may request a hearing.

Step 5 punish

The NFA has set up a department responsible for financial audit and moral supervision under the leadership of the executive vice president and CEO of NFA. In case of NFA violation, the department needs to prepare a report and submit it to the business steering Committee. According to the report, the Committee takes action, expresses opinions or makes formal complaints to members (or joint members). In the latter case, the defendant must give a reply and have the right to participate in the hearing of the hearing Committee. If the problem is not solved and a decision against the defendant has been made, members or joint members may appeal to the Appeal Board, and the appeal result is final.

Possible penalties for members include expulsion, suspension of membership, prohibition of contact with members, warning, reprimand, a fine not exceeding $250,000 per case or other similar penalties. At the same time, in order to protect the market, customers or other members in time, the President and the Executive Committee can jointly take emergency measures. Before or after this, members and joint members can go to the business steering Committee to request a hearing.

6. New NFA regulations

According to the new requirements of NFA, all foreign exchange dealers must submit electronic statements every day from February 4th, 20 1 1. The report must be prepared at 5pm new york time, and the confirmed report should be uploaded to the NFA system before midnight. After February 4, anyone who fails to hand in the form on time will be fined $200 a day.