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?