Notices to Members

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The Notice to Members below, posted for Members' reference, was mailed on December 29, 2016, to all NFA Members as of the close of business on Tuesday, December 27, 2016.

Notice I-16-32

December 29, 2016

Notice of Annual Meeting of NFA Members

NFA will hold its Annual Meeting of Members on Tuesday, February 7, 2017, at 10:00 a.m., Central Time, in the offices of NFA, 300 S. Riverside Plaza, 18th Floor, Chicago, IL. The agenda of the meeting is:

  1. Opening remarks.
  2. Election of an individual to the NFA Board of Directors (NFA Board) from the top 5% of commodity pool operators or commodity trading advisors (CPO or CTA, respectively, and CPO/CTA, collectively) reporting any funds under management allocated to futures and swaps (CPO/CTA Director Election).
  3. Members' questions regarding NFA-related topics.
  4. Any other business that may properly come before the Annual Meeting (or any adjournment or postponement thereof).

It is important that at least 50 Members whose primary business category is listed as CPO or CTA on their Form 7-R (CPO/CTA Members) as of December 27, 2016 (the record date for the Annual Meeting) be represented by proxy or in person at the Annual Meeting to satisfy the quorum requirement for the CPO/CTA Director Election. CPO/CTA Members are encouraged to submit their proxies electronically as described under Voting Methods below. In order for a proxy to be considered validly submitted, the Executive Representative of the CPO/CTA Member eligible to vote in the election must either submit the proxy electronically or sign, date and mail the hardcopy proxy included in the hardcopy mailing.

Only CPO/CTA Members, as of the close of business on Tuesday, December 27, 2016 (the Annual Meeting record date), are eligible to vote in the CPO/CTA Director Election.

The CPO/CTA Members who are present in person or represented by proxy at the Annual Meeting (so long as a quorum is present or represented at the Annual Meeting) shall elect the individual to the NFA Board by plurality vote.

Please direct any questions or comments regarding the Annual Meeting of Members or the CPO/CTA Director Election to Thomas W. Sexton, General Counsel, Senior Vice President and Corporate Secretary ( or 312-781-1413) or Michael J. Crowley, Associate General Counsel ( or 312-781-1388).


Nomination Process

In accordance with NFA Bylaw 406, on October 4, 2016, NFA notified all Members in the futures commission merchant (FCM) and leverage transaction merchant (LTM), swap dealer (SD), major swap participant (MSP), retail foreign exchange dealer (RFED), introducing broker (IB), CPO and CTA categories of the elected Directors and Nominating Committee members whose terms would be expiring in February 2017 and requested recommendations for individuals for consideration by the NFA Nominating Committee for nomination to these positions. On November 16, 2016, NFA notified NFA Members of the candidates that the Nominating Committee nominated for election to the Board and Nominating Committee and advised Members of the procedures by which additional candidates could petition to be nominated for election. With the exception of one seat on the Board in the CPO/CTA category, the Nominating Committee nominated only one candidate for election to fill the expiring Director and Nominating Committee positions. No members have petitioned for nomination of a candidate for election to the Board or Nominating Committee. Accordingly, NFA's Executive Committee, pursuant to Article VII, Section 3(c) and Article X, Section 3 of NFA's Certificate of Incorporation, will elect the nominees in the uncontested elections to the Board and Nominating Committee in January 2017.

CPO/CTA Director Election

Pursuant to Article VII of NFA's Certificate of Incorporation, at least one Director must be a representative of a CPO/CTA Member that ranked within the top 5% of CPOs or CTAs reporting any funds under management allocated to futures and swaps (as defined in Article XVIII) on NFA Form PQR and NFA Form PR as of June 30 of the prior calendar year (top 5% CPO/CTA Members). The CPO/CTA Subcommittee of the NFA Nominating Committee nominated the following two individuals to be a representative of a top 5% CPO/CTA Member:

  • Stephen Berger, Director, Government and Regulatory Policy, Citadel
  • Martin Lueck, Research Director, Aspect Capital Limited.

Materials provided by Messrs. Berger and Lueck are provided with these materials.

Voting Eligibility

Only CPO/CTA Members of NFA as of the close of business on Tuesday, December 27, 2016, are eligible to vote for the nominees running for the top 5% CPO/CTA Member Director seat (eligible CPO/CTA Members).

Voting Methods

A hardcopy proxy listing the CPO/CTA Member Director candidates is included with the hardcopy version of the Notice of Annual Meeting of NFA Members (Notice).

The Executive Representative of eligible CPO/CTA Members may submit a hardcopy proxy by mail or a proxy electronically through the internet. HARDCOPY PROXIES MUST BE MAILED TO CORPORATE ELECTION SERVICES (CES), NOT NFA, AT THE ADDRESS LISTED ON THE PROXY CARD. The proxy card also contains instructions regarding how to mail the hardcopy proxy or submit a proxy electronically. Alternatively, Executive Representatives of eligible CPO/CTA Members may attend the Annual Meeting and vote in person.

Proxies must be electronically submitted and hardcopy proxies must be received by CES no later than 11:59 p.m., Central Time, on February 6, 2017.

Attendance at the Annual Meeting and voting in person by a CPO/CTA Executive Representative will revoke any previously provided proxy; however, attendance at the Annual Meeting will not in and of itself constitute a revocation of a previously provided proxy. Additionally, delivering another proxy after previously submitting a proxy will revoke any previously provided proxy. In the event a CPO/CTA Member submits multiple proxies, in accordance with procedures adopted by NFA's Board, the proxy last received will be counted and all previously provided proxies will be revoked.

As mentioned in the Notice, for purposes of the top 5% CPO/CTA Director election the quorum requirement of 50 CPO/CTA Members as of the record date must be met. NFA may telephone or otherwise communicate with Executive Representatives of CPO/CTA Members during the election period to ensure that this quorum requirement is met.

Voting Instructions

The named proxies shall vote as instructed by the CPO/CTA Member. In the absence of a direction with respect to the election, any duly delivered proxy will be counted as a withhold vote (i.e., not be counted in determining the outcome of the election, but will be counted in determining the presence of a quorum at the Annual Meeting). In their discretion, the named proxies will be authorized to vote upon all such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof.

Tie Vote

In the event that the top 5% CPO/CTA Director election results in a tie vote, NFA's Board, the Chairman of NFA's Board or NFA's President will schedule a Special Meeting of Members to conduct a run-off election.

NFA Board of Directors - Candidate Statement

Stephen Berger, Director, Government & Regulatory Policy, Citadel LLC

I am honored by the opportunity to represent you on the Board of Directors of the National Futures Association and am committed to advancing the interests of all of NFA's CPO and CTA members.

As our industry continues to digest and adapt to profound regulatory changes and as further opportunities and challenges present themselves, I am confident I possess the skill, experience, vision, and discipline to help the NFA further its mission of safeguarding market integrity, protecting investors, and helping members fulfill their regulatory responsibilities.

I am guided by two key principles:

  • Our markets should be safe, fair, efficient, competitive, and accessible to all
  • Regulation that is thoughtful, well-calibrated, and applied in a streamlined and proportionate fashion can help achieve these goals.

At Citadel, I manage our firm's engagement with legislative and regulatory initiatives impacting the financial industry globally, including the Dodd-Frank Act in the United States and EMIR and MiFID II in Europe. I meet frequently with policymakers and regulators in the United States and Europe to discuss concerns with proposed legislation and regulation to ensure that our financial markets are fair, efficient, competitive, and transparent.

I have testified before the House Agriculture Subcommittee on Commodity Exchanges, Energy & Credit and presented before the CFTC's Energy and Environmental Markets Advisory Committee, Market Risk Advisory Committee, and Technology Advisory Committee. Previously, I served as Chair of the Managed Funds Association's Derivatives and Swaps Committee and I actively participate in a number of MFA, AIMA, SIFMA AMG, FIA, and ISDA committees.

Before joining Citadel, I was an Executive Director at UBS Investment Bank, where I led UBS's US financial regulatory reform team. I spent the early part of my career in Hong Kong, working in both investment banking and trading roles. Raised in Downers Grove, Illinois, I graduated from Downers Grove South High School in 1997 and Princeton University in 2001.

My skills and experience will enable me to advance the interests of NFA's CPO and CTA members in the following areas:

  • Clearing Access and Costs: The ability to efficiently access markets depends on a healthy and diverse clearing ecosystem. Unfortunately, certain well-intentioned post-financial crisis reforms and other headwinds have disproportionately raised the cost of client clearing and decreased client clearing capacity, particularly for smaller customers. Vigilance is needed to ensure that there is fair and affordable access to clearing and any measures that undermine these goals must be re-examined.
  • Capital Requirements: Minimum capital requirements are neither necessary nor appropriate for CPOs or CTAs. While the protection of customer assets is paramount, there are other existing legal protections and operational controls that can achieve the objective.
  • Modernizing Reporting and Recordkeeping: NFA's antiquated filing system should be updated to make it more user friendly and the filing process less cumbersome. CFTC recordkeeping requirements should be modernized to be compatible with current technologies and adaptable to future advancements.
  • Position Limits: Any expansion of Federal position limits to a given commodity future should only be implemented after a specific necessity finding is made, and only in a measured and appropriately calibrated fashion that preserves price discovery, market liquidity, and hedging needs.
  • Clearinghouse Resiliency: The integrity and stability of clearinghouses are the bedrock on which our markets are built. Diligence is required to ensure that clearinghouses are well-governed, safe, sound, and resilient. However, further measures in this area should not increase costs for investors today or inappropriately shift the financial burden of a clearinghouse failure onto investors in the future.
  • Redundant Registration and Costs: The removal of a widely used CPO registration exemption in 2012 triggered a redundant and extremely burdensome requirement for certain firms to dually register with the CFTC and SEC. The removal of this exemption should be revisited to ascertain whether it has achieved its policy goals and yielded any benefits that outweigh its attendant costs. At a minimum, regulation of, and reporting requirements for, dual registrants must be better coordinated, streamlined and rationalized.

Thank you for your consideration. I look forward to representing you on the NFA Board. Please do not hesitate to reach out if you have any questions or items to discuss.

Statement of Martin Lueck for NFA Board of Directors CTA/CPO Seat

Dear Fellow CTA/CPO NFA Member,

One of the CTA/CPO Board Seats is contested in this year's NFA elections. I am running and write to ask for your vote.

New president: different regulation?

There are wide expectations that Donald Trump's presidency will result in changes to the regulatory landscape - both in policy and the people appointed to key positions. We all appreciate that regulatory change can give rise to its own challenges by creating uncertainty and potential complications for businesses both large and small as they work to understand and adapt to new rules.

Making the voice of the CTA/CPO community heard

As an industry, we have been subject to extensive and costly new regulation since the Global Financial Crisis (GFC) in 2008. If, as seems probable, the tectonic plates of the regulatory landscape are about to shift again, it is more important than ever that the voice of the CTA/CPO community be heard. If I am elected to the NFA Board I will represent your interests, and work with both NFA Staff and other regulators, to ensure that your perspective and concerns are taken into account as the regulatory regime evolves. Although CTA/CPO members comprise the majority of NFA member firms, the voices of smaller firms are not always heard alongside those of the FCMs, Exchanges and larger institutions. I want to ensure that does not happen.

My experience

An American raised in Switzerland and the UK, I studied Physics at Oxford Univeristy before entering finance and co-founding two successful CTAs. I understand the practical realities of running an entrepreneurial investment management firm. I have been involved in managed futures since 1984 (two years after the NFA started operating), initially at Brockham Securities, a London based CTA. Then, in 1987 I founded Adam, Harding and Lueck Limited (AHL), with Michael Adam and David Harding (which is now part of the Man Group); and in 1997 I went on to co-found Aspect Capital. I am Aspect's Research Director, and oversee the team responsible for developing all of Aspect's investment programs. I chair the Investment Management Committee, responsible for setting and overseeing Aspect's strategic research agenda, and I am a member of Aspect's Risk Management Committee which assumes overall responsibility for the operation of Aspect's investment programs. I am also President of Aspect's US subsidiary, Aspect Capital Inc. and travel frequently between the UK and US. This broad base of experience goes back over 32 years and includes starting businesses, developing quantitative strategies, trading, and dealing with both US and non-US regulators along the way, and I think well qualifies me to represent the interests of the CTA/CPO community.

Regulation: my view

During my time working in the CTA/CPO sector I have seen the regulatory pendulum swing from the 'light touch' approach of the pre-GFC period, through to the more stringent 'heavy handed' requirements of the Dodd-Frank Act. During that time, I have come to appreciate that healthy and successful markets need effective, clear, proportionate and consistently applied regulation. This requires regulators to make the best use of their resources by identifying where regulatory action will have the greatest impact to prevent harm to markets and protect customer capital, without creating unnecessary burdens or market friction. Rules and supervisory practices should be well-targeted, transparent and take into account not only the costs to investors but also the costs to firms. If I am fortunate enough to be elected to the NFA Board I will endeavor to help the NFA maintain this balance.

I have dedicated my career to managed futures and I understand the challenges that smaller firms face, especially when starting up their businesses. I am passionate about the diversifying benefits that managed futures can bring to investors' portfolios. Good regulation should faciliate our ability to deliver those benefits - which means affording investors key safeguards that include preventing fraud, protecting customer funds, keeping out unregistered operators, identifying high risk firms, and monitoring market activity to provide fair treatment of all participants. The failure of firms such as Peregrine, MF Global and Alphametrix had the potential to damage the public's faith in our industry, illustrating just how important it is to maintain a robust regulatory framework. However, regulators also need to take a balanced approach, weighing investor protection concerns with an awareness of the costs in time and money that regulation imposes, often in disproportionate measure on smaller firms. The development of our regulations should not inexorably increase the barriers to entry and the costs of doing business. Our investors are best served by a diverse and entrepreneurial CTA/CPO industry rather than one that is dominated by larger firms with the resources to navigate through an increasingly complex and costly regulatory environment.

Regulatory agenda:

High Frequency Trading (HFT): Many CTAs and CPOs have been concerned that HFT can interfere with the fair process of price discovery. The CFTC's proposed 'Regulation Automated Trading' is a well-intentioned attempt to address some of these concerns. However, further work is required to ensure that any new rules are effective at preventing problems without interfering with market liquidity or creating unnecessary obligations.

Co-ordination among regulators: As CTAs expand their offerings to include 1940 Act Funds and other products, overlapping and sometimes conflicting rules and requirements are often imposed in what appears to be an uncoordinated manner. For example, a CPO that is registered as an Investment Adviser with the SEC and files Form PF need only file a small portion of Form CPO-PQR with the CFTC. However, that CPO still has to file NFA Form PQR with the NFA. The NFA filing is onerous and will become increasingly complex once disclosures on 'parallel managed accounts' are mandated in due course. Also, the SEC and NFA have issued similar (but different) cybersecurity requirements. While there are significant benefits to having separate regulators for futures and stocks, where there is overlap more can be done to make the regulatory process more efficient and coordinated to the benefit of both regulated firms and investors.

Form over substance regulation: Effective regulation should be more than just a 'box ticking' exercise. It should be geared to produce noticeable results; the content and form of the action should be in keeping with the aim pursued; and complexity should be avoided wherever possible. For example, in 2014 the CFTC removed the requirement on CPOs to seek CFTC approval for certain delegation arrangements. As such, this was a welcome, proportionate approach to regulation.

Thank you for taking the time to read my statement. It would be a privilege to serve the CTA/CPO community as your NFA Board Member. If you have any questions please feel free to reach out to me directly.

Yours faithfully,

Martin Lueck

Martin Lueck, Co-founder and Research Director
Aspect Capital Limited, +44 207 170 9500

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