Discussion with CFTC Regarding Forex Registration

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No New Information on Forex Regulations

I have been getting more and more questions regarding forex registration and unfortunately I have not had much to say because there has been little information coming from the CFTC.  The NFA has done a good job of anticipating what those rules will generally look like, but the NFA (like us) must wait for the CFTC to propose (and then adopt) regulations requiring the registration of forex managers.  Accordingly any preliminary guidance from the NFA should be taken as that – preliminary guidance.  The fact that the regulations are coming obviously puts pressure on legal professionals and forex managers alike as we all try to figure out what will need to be done, when and how.

For this reason I have been calling the CFTC to try to figure out when we might hear something.  After calling the CFTC daily for over a week now, today I finally received a call back from a representative of the CFTC’s Division of Clearing and Intermediary Oversight.  Unfortunately, the representative was as tight-lipped about the future regulations as the CFTC has been up to this point.

During the conversation, I asked several questions and did not receive any responses other than what you would expect from a government agency.  The gist of the conversation was that the CFTC is working on the regulations and the reason that it is taking so long is that there are many aspects to the regulations which must be thoroughly reviewed be many different members and parts of the CFTC.   It sounded like the regulations could be quite detailed – the representative stated that it is not just simply these managers with this amount of assets must register, that the regulations will be comprehensive.  Another issue which remains unanswered is whether there will be exemptions from the registration provisions, similar to the current CPO exemptions and CTA exemptions from registration.

So with that being said, there is not much new to report.  Forex managers are still in a bit of a limbo until the CFTC promulgates the proposed regulations.  Until that happens it would be wise for forex managers to consider getting ready for registration by discussing the issue with a forex attorney.  Managers may also decide to move forward and begin taking the Series 3 exam and the Series 34 exam.  Managers (especially forex hedge fund managers) are especially encouraged to talk with their attorney about potential registration requirements under their state commodity codes – I will be posting more on this issue tomorrow.

I know this does not tell you very much, but please feel free to contact me if you have any specific questions or if you would like to find out more about forex CPO, CTA or Introducing Broker registration.

For more articles related to forex law and registration, please visit our forex hedge fund articles page.

1 thought on “Discussion with CFTC Regarding Forex Registration

  1. Marc Ilgen

    Thanks for the information. I too have been frustrated in trying to get some more specific information regarding new regulations for forex IBs. I have a question for you. A Forex IB can receive trade rebates for accounts that the IB introduces to the FCM. But is an IB the ONLY type of entity that can act as an “introducer”? More specifically, suppose an individual (and/or one person LLC) registers with the NFA as a CTA instead of an IB. (CTA requirements are MUCH less onerous than IB requirements). Is a CTA eligible to receive trade rebates from the FCM? Or is this up to the FCM itself? Suppose the LLC declares itself to be a CTA but does not register as such (claiming the “under 15 customers” exemption). In this case can the self-declared CTA still be eligible to receive trade rebates as an “introducer”? I understand this regs are still being decided, but maybe there is some guidance that can be gleaned from the futures market? Any ideas? Thanks.

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