The Commodity Futures Trading Commission (CFTC) has issued final forex rules which become effective on October 18, 2010. Any firm acting as a counterparty to certain retail off-exchange forex transactions is required to register as a Retail Foreign Exchange Dealer (RFED). (Futures Commission Merchants offering forex transactions to its retail customers but acting primarily or substantially as a traditional FCM are exempt from registering as an RFED but must be approved as a Forex Firm and designated as a Forex Dealer Member of NFA.)
In addition, any individual acting as a forex solicitor, account manager and/or pool operator is required to register with the CFTC as Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) or Commodity Pool Operators (CPOs) and become Members of National Futures Association.
National Futures Association (NFA) has prepared this brief summary of the forex registration requirements to give firm and individual applicants a basic understanding of the registration process.
All forex firms registering as a Retail Foreign Exchange Dealer, Introducing Broker (Independent or Guaranteed), Commodity Trading Advisor or Commodity Pool Operator must meet the following requirements:
Completed Online Registration Forms:
Applicants must file a completed 7-R form through NFA's Online Registration System (ORS).
Additional Requirements for Introducing Brokers:
Applicants registering as Guaranteed Introducing Brokers must submit a completed Guarantee Agreement (Form 1-FR-IB Part B) from an RFED or FCM. Applicants registering as Independent Introducing Brokers must meet additional financial requirements.
Additional Requirements for Commodity Trading Advisors and Commodity Pool Operators:
Before they can begin soliciting customers, CTAs and CPOs must submit a Disclosure Document to NFA for approval. The Disclosure Document must be completed in accordance with NFA Compliance Rule 2-41.
Individual Registration Forms:
Any individual applying as an Associated Person (AP) Principal or a Forex AP of a Forex IB, CTA, CPO or RFED must file a completed 8-R form through NFA's Online Registration System (ORS).
All individuals who solicit retail off-exchange forex business or who supervise that activity will be required to take and pass two exams. One is the National Commodity Futures Examination (NCFE or Series 3), which covers on-exchange futures trading theory, terminology, and regulation. The second exam is the Retail Off-Exchange Forex Examination, Series 34. This hour-long exam consists exclusively of forex-related questions. NFA has published Study Guides for both exams in the Registration section of its website (www.nfa.futures.org).
Both exams are currently available and are administered by the Financial Industry Regulatory Authority (FINRA). The testing application form (U10) must be completed online at http://www.finra.org. The fee for taking the Series 3 exam is $115 and the fee for taking the Series 34 exam is $75.
NFA requires all individual applicants to submit fingerprint cards, which are sent to the Federal Bureau of Investigation (FBI) to determine if the applicant has a criminal record. NFA can only accept and process a complete FBI Applicant card. These cards are available by contacting NFA's Information Center at the numbers listed below. Applicants are encouraged to submit more than one set of fingerprints with their application to avoid delays in obtaining additional sets if necessary for processing.
NFA offers a fingerprinting service for NFA applicants at the Chicago office (300 South Riverside Plaza, Suite 1800) between the hours of 8:30 a.m. and 4:00 p.m. for $15 (cash, check or money order). In order to use NFA's fingerprint service, visitors must be pre-registered in the building's visitor registry. Visitors should contact NFA's Information Center at the numbers listed below or send an email to firstname.lastname@example.org to pre-register their name and date of visit so they can receive access to NFA's offices on the 18th floor. NFA recommends that visitors pre-register at least a day prior to their visit.
All individuals being fingerprinted will be required to present two forms of identification, one of which is a valid picture ID issued by a government agency, in order to verify the identity of the person being fingerprinted. NFA now submits digital images of fingerprints to the FBI for criminal background checks. Results are received in three days or less, and in some cases within several hours, resulting in a faster and more efficient registration process.
CFTC Registration Fees:
$500 non-refundable registration fee for RFEDs
$200 non-refundable registration fee for each IB, CTA or CPO
$85 non-refundable registration fee for each principal and/or AP of an IB, CTA or CPO
NFA Membership Dues:*
$125,000 non-refundable annual dues for a Retail Foreign Exchange Dealer
$2,500 non-refundable annual dues for each IB, CTA or CPO
This brief overview is not intended to provide a comprehensive guide to CFTC registration. NFA has published an ORS Users Guide and a tutorial on its website that contain more detailed information. Within the next several days, NFA will be posting a series of educational videos on its website that will provide step-by-step instructions for common registration tasks.
For additional information, visit NFA's website at www.nfa.futures.org or contact NFA's Information Center at (800) 621-3570 from 8:00 a.m. to 5:00 p.m. CT Monday through Friday.
September 2010 (Updated February 2012)
NFA Members can file many of their required documents electronically.