In 1974 Congress established the Commodity Futures Trading Commission (CFTC). The same legislation that established the CFTC also authorized the creation of "registered futures associations," giving the futures industry the opportunity to create a self-regulatory organization1.
In 1976, Leo Melamed, chairman of the Chicago Mercantile Exchange (currently Permanent Special Advisor to the NFA Executive Committee and Board of Directors), persuaded other industry leaders that a Title III organization would unquestionably benefit the futures industry and the public it serves.
The creation of NFA was an historic event—one that gave the futures industry the regulatory framework on which its markets could continue to grow and succeed. Mr. Melamed and other industry leaders developed articles of incorporation and formed an NFA organizing committee. The NFA organizing committee was comprised of Leo Melamed, Chairman; David T. Johnston, Vice-Chairman; John J. Conheeney; George D.F. Lamborn; Warren W. Lebeck; Leslie Rosenthal and Howard A. Stotler.
Early in its deliberations, the organizing committee reached certain important conclusions. First, substantial cost savings could be realized from a single organization representing all futures industry segments. Second, industry segments could not be successfully self-regulated unless they joined NFA. Accordingly, the organizing committee decided that membership in NFA should be mandatory.
In February 1977, the CFTC heard the proposal of the NFA organizing committee and, five days later, announced that it "endorses the concept of cooperative regulation and considers the NFA proposal to be a valuable first step toward implementing the purposes of Title III".
NFA's formal designation as a "registered futures association" was granted by the CFTC on September 22, 1981. Robert K. Wilmouth became NFA's first president and CEO in early 1982 and NFA began its regulatory operations later that year, marking the end of an extraordinary organizational effort that had spanned more than six years.
Congress passed legislation in 2000 and 2008 requiring firms acting as counterparties to retail forex transactions, as well as forex pool operators, trading advisors and introducing brokers to register with the CFTC and become Members of NFA. Similarly, in 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gave the CFTC rulemaking authority and oversight over swaps, swap dealers and major swap participants. Subsequently, the CFTC passed regulations requiring swap dealers and major swap participants to register with the CFTC and become Members of NFA.
1Section 17 was added to the Commodity Exchange Act by Title III of the Commodity Futures Trading Commission (CFTC) Act of 1974 and provides for the registration and CFTC oversight of self-regulatory associations of futures professionals.
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