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Notice I-13-06

March 06, 2013

Information Regarding Governance, Dues and Assessments for Swap Dealers (SDs) and Major Swap Participants (MSPs)

Governance
In January 2012, the CFTC issued final rules that require each registered SD and MSP to become a Member of a registered futures association. The CFTC recently approved amendments to NFA's Articles of Incorporation to integrate SDs and MSPs into NFA's membership and governance structure. Therefore, SDs and MSPs may become NFA members as of April 1, 2013.

Dues and Assessments
Last November, NFA's Board of Directors approved a proposal from the Finance Committee to establish a revenue structure for SDs and MSPs to recover anticipated costs associated with the regulation of SDs and MSPs. Prior to the Board meeting, NFA's Finance Committee members met with representatives from several prospective SDs and determined that NFA's revenue structure for SDs and MSPs would be generated solely from membership dues. NFA's Swap Dealer Advisory Committee (SDAC) also reviewed the Finance Committee's proposed revenue structure and supported the Finance Committee's recommendation.

The CFTC recently approved amendments to NFA Bylaw 1301(f) to adopt the following annual membership dues structure for SDs and MSPs in which:

  • Each SD Member that meets the definition of a Large Financial Institution pursuant to Article XVIII(n) of NFA's Articles of Incorporation shall pay to NFA annual dues in the amount of $1,000,000 (Tier 1);
  • Each SD Member that does not meet the definition of a Large Financial Institution pursuant to Article XVIII(n) of NFA's Articles of Incorporation shall pay to NFA annual dues in the amount of $250,000 (Tier 2);
  • Each MSP Member shall pay to NFA annual dues in the amount of $250,000; and
  • Any SD Member or MSP Member that is an affiliate as defined in Article XVIII(b) of NFA's Articles of Incorporation of a SD Member or a MSP Member shall pay annual dues in the amount of $150,000.

As of April 1, 2013, NFA will begin invoicing provisionally registered SDs and MSPs for the first quarterly installment of their annual NFA membership dues. There are three methods in which SD and MSP Members can pay their dues: firms can wire the funds to NFA, send a check to NFA's lockbox or the firm's administrator can make a payment via an electronic funds transfer through NFA's Online Registration System. Please note that all dues invoices will be sent to the firm's listed accounting contact in NFA's Online Registration System ("ORS"). If you would like to edit your accounting contact prior to the April 1, 2013 invoice, NFA requires this change to be made no later than March 15, 2013.

If your firm has an affiliate(s) that will also become an NFA member(s), one entity (the "primary payer") must pay an annual dues amount of $1,000,000 or $250,000, and each of your firm's affiliates must pay an annual dues amount of $150,000. Unless NFA receives prior notification, the primary payer will be the entity that was the first among a group of affiliated SD or MSP entities to apply for registration, defined as the entity within that corporate family with the lowest numerical NFA ID number. Each other member within the same corporate family will be designated as an affiliate and will be invoiced at the affiliate annual dues amount. In a separate email, SDs and MSPs that are part of a corporate family will receive specific information as to how this designation method applies to provisionally registered entities within their corporate family. Alternatively, if you would like to designate a particular entity as the primary payer, please confirm via email to bheslop@nfa.futures.org prior to March 15, 2013.

Questions concerning the payment of dues should be directed to Tanika Pierre (tpierre@nfa.futures.org or 312-781-1383) or Matt Saxinger (msaxinger@nfa.futures.org or 312-781-1417).

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