Making Self-Regulation Work

Introduction
NFA's Role in the U.S. Futures Industry
How NFA Fights Fraud and Abuse
Resources for Investors
Dispute Resolution
Making Self-Regulation Work
Meeting the Regulatory Needs of an Evolving Industry

Making Self-Regulation Work

Keeping the Self in Self-Regulation. An important element of self-regulatory success is active, voluntary Member involvement. NFA's 25-member Board of Directors consists of representatives of every category of membership. These representatives, elected by their peers, are joined by representatives from U.S. futures exchanges and non-industry Board members to form a governing body that is responsible for interpreting the mission of the organization, developing policy and ensuring a sound financial structure.

NFA's organizational structure gives our Members many opportunities to participate in the self-regulatory process, from rule making to rule enforcement. Members sit on NFA's Business Conduct Committees, Advisory Committees and numerous special committees appointed by the Board of Directors to ensure maximum Member involvement in all of our regulatory efforts.

Operating efficiently. NFA is constantly looking for new ways to use technology to streamline work processes and increase efficiency. For example, in June 2002 we launched our Online Registration System (ORS), leading the futures industry into a new era of increased registration efficiency. In 2004, we began submitting digital image of fingerprint cards to the FBI, shortening the background check procedure from an average of three weeks to as little as several hours. Later that year we introduced Easy File, an online system that allows certain membership categories to file financial statements with NFA electronically.

Many regulatory efficiencies also have been achieved through the delegation of regulatory responsibilities to NFA from the CFTC. Throughout NFA's history, the CFTC has authorized NFA to conduct additional regulatory functions. For example, NFA now processes registration applications for all futures industry participants, initiates actions to revoke and/or deny registrations, acts as agent for service of process for foreign firms under Part 30 of the Commodity Exchange Act and reviews pool financial statements, as well as CPO and CTA Disclosure Documents.

Providing leadership. NFA's accomplishments and reputation are a direct result of the commitment to quality work exhibited by each and every NFA employee on a daily basis. Their professionalism, expertise and commitment to NFA's mission and goals are key elements of our success.

NFA has also developed an extensive Member outreach program to help our Members understand and fulfill their regulatory obligations. We publish several regulatory guides, offer education visits to new Members to help them establish sound business practices, and periodically host Member meetings at various locations around the country.

Adding value to the industry. Even in areas where we do not have regulatory jurisdiction, NFA constantly looks for opportunities to provide additional value to the industry. For example, NFA's restitution program helps customers involved in commodity fraud cases recover some of the money they lost dealing with dishonest salespeople.

The program usually applies to judgments awarded in cases brought by the CFTC involving commodity fraud by unregistered firms and individuals. Although the majority of these cases do not involve NFA Members, offering the restitution program reflects our commitment to market integrity and investor protection. And because NFA does not charge any fees for administering the restitution service, we are able to return as much money as possible to the victims.