1. What is NFA Bylaw 1101?
Bylaw 1101 prohibits NFA Members from doing business with most non-Members that are required to be registered with the CFTC as an FCM, IB, CPO, or CTA.What is NFA Bylaw 1101?
2. Am I required to have procedures for complying with Bylaw 1101?
Yes. The procedures should include 1) the steps firm personnel will take to determine if an entity is required to be registered with the CFTC and to be an NFA Member and 2) a requirement that firm personnel review BASIC to verify that the entity is registered and an NFA Member (if registration and membership are required). The procedures should also require firm personnel to document the review and maintain the documentation.Am I required to have procedures for complying with Bylaw 1101?
3. How do I know if someone my firm is considering doing business with must register with the CFTC?
Visit the Who Has to Register section of NFA's Web site for information on the registration requirements.How do I know if someone my firm is considering doing business with must register with the CFTC?
4. How do I find out if an individual or entity is a Member of NFA?
Access BASIC to check the registration and membership status of that individual or entity.How do I find out if an individual or entity is a Member of NFA?
5. What are my responsibilities when purchasing lead lists from outside entities?
Whether a lead provider is required to be registered as an IB depends on how it generates the leads. If the provider is not a registered IB and an NFA Member, the Member purchasing the lists must find out where they come from. For more information, see the Interpretive Notice 9039.What are my responsibilities when purchasing lead lists from outside entities?
6. What must my firm consider when doing business with a foreign account or entity?
The following table shows when an individual/entity is required to be registered as an FCM, IB, CPO, or CTA based on the locations of the entity, its customers, and the exchanges on which contracts will be traded. Exemptions may, of course, apply.
|Entity Location||Customer Location||Exchange Location||Registration Required|
|United States||United States||United States||Yes|
|United States||United States||Foreign Country||Yes|
|United States||Foreign Country||United States||Yes|
|United States||Foreign Country||Foreign Country||No|
|Foreign Country||United States||United States||Yes|
|Foreign Country||United States||Foreign Country||*|
|Foreign Country||Foreign Country||United States||No**|
|Foreign Country||Foreign Country||Foreign Country||No|
*The firm must register unless it has received an exemption under CFTC Regulation 30.5 or 30.10. BASIC will tell you if the firm is exempt under one of these rules.
** For a foreign broker acting as an FCM, registration is not required only if it submits any commodity interest transactions executed on or subject to the rules of a designated contract market for clearing on an omnibus basis through a registered FCM.What must my firm consider when doing business with a foreign account or entity?
7. Will my firm violate Bylaw 1101 if it accepts third party checks for deposit into a customer's account?
It depends on the circumstances. For example, if you receive checks from several individuals for the same account, the person whose name is on the account may be acting as an unregistered FCM or CPO. Before accepting a third party check for a customer account, you should carefully review the reason for the deposit, ask why the account is receiving a third party check, and assess the relationship between the parties. If you accept the deposit, you should document both the reason for accepting it and the steps you took to investigate the situation.Will my firm violate Bylaw 1101 if it accepts third party checks for deposit into a customer's account?