Proficiency Requirements

Registration Rule 401 requires each individual who is applying for NFA membership as a futures commission merchant (FCM), retail foreign exchange dealer (RFED), introducing broker (IB), commodity pool operator (CPO), or commodity trading advisor (CTA), or as an associated person (AP) of these entities, to satisfy proficiency requirements. In most cases, an individual seeking NFA membership or registration as an AP is required to pass the National Commodity Futures Examination (NCFE or Series 3) within two years preceding their application in order to fulfill this requirement, unless:

  • the individual is currently registered as a floor broker; or
  • the individual passed the Series 3 more than two years preceding the application and since that date has not had a continuous registration gap for more than two years.

To sign up for any of the futures industry exams, the applicant must submit an application online by visiting FINRA's website. Normally, NFA will receive evidence directly from FINRA that individuals have passed one of the futures industry exams. In unusual circumstances, NFA may request the individual provide proof that he or she passed an examination.

Alternative Demonstrations of Proficiency

Based on an individual's registration status and the type of business an individual conducts, he or she may be eligible for one of the following alternatives to the Series 3 examination:

Futures Managed Funds Examination (Series 31)

An individual may use the Series 31 if:

  • the individual is registered with FINRA as a General Securities Representative with a FINRA member firm;
  • that FINRA member firm is also an NFA FCM or IB Member firm or an applicant for NFA FCM or IB membership and is sponsoring the individual for AP registration; and
  • the individual is going to limit futures activities on behalf of that NFA/FINRA sponsoring firm to soliciting funds, securities or property for participation in a commodity pool, soliciting discretionary accounts to be managed by CTAs or supervising persons who perform these same limited activities.

Limited Futures Examination-Regulations (Series 32)

An individual may use the Series 32 if, within the two years prior to filing the application, they have been registered or licensed to solicit customer business in futures in a jurisdiction outside of the United States (currently UK and Canada only). In order to be eligible for this alternative exam, applicants must submit proof of the appropriate registration or license to NFA along with additional information or documentation relating to an applicant's market knowledge such as completion of the appropriate qualifications testing. In the UK, an individual would need to be currently approved or have been approved as Control Function 30 (CF30) within the two years prior to filing the application and also provide one of the following Certificates in Derivatives: Derivatives - Level 3 or Financial Derivatives - Level 3. If an individual has been continuously approved as CF30 (previously CF21) since December 1, 2001, that individual would not be required to provide proof of having obtained a Certificate in Derivatives. Any questions regarding eligibility should be directed to NFA prior to taking the Series 32.

 

Referral of Securities' Clients

An individual is not required to take an examination if:

  • the individual is registered with FINRA as a General Securities Representative with a FINRA member firm;
  • that FINRA member firm is also an NFA FCM or IB member firm or an applicant for NFA FCM or IB membership and is sponsoring the individual for AP registration; and
  • the individual is going to limit futures activity on behalf of that sponsor to referring clients to APs of that sponsor, which referrals are solely incidental to the individual's business as a General Securities Representative of that sponsor, or supervising persons who perform this same limited activity.

Waivers for CPOs and CTAs Trading Primarily in Securities

NFA Registration Rule 402 allows NFA to waive the examination requirements for certain individuals who are associated with CPOs that are required to register solely because they operate commodity pools principally engaged in securities transactions and/or who are associated with CTAs that are required to register solely because their securities advisory services include advice on the use of futures and options for risk management purposes. The individual or firm requesting the waiver must provide a written description of the facts that qualify the individual for a waiver.

APs Whose Activities are Limited to Swaps

Individuals are not required to take an examination if their sole activities subject to CFTC regulation are and will continue to be limited to:

  • soliciting or accepting on behalf of the sponsor orders for swaps subject to the jurisdiction of the CFTC;
  • soliciting on behalf of the sponsor funds, securities or property for participation in a commodity pool that:
    • Exclusively trades swaps subject to the jurisdiction of the CFTC; or
    • Trades swaps subject to the jurisdiction of the CFTC in a commodity pool and the sponsor has been granted or is seeking a waiver from the Series 3 for its APs on the basis that but for the trading of swaps it would be eligible for the exclusion from the definition of CPO under CFTC Regulation 4.5(c)(2)(iii)(A) or (B) or an exemption from registration under CFTC Regulation 4.13(a)(3);
  • soliciting on behalf of the sponsor clients to open discretionary accounts that exclusively trade swaps subject to the jurisdiction of the CFTC to be managed by registered CTAs; or
  • supervising on behalf of the sponsor persons whose activities are so limited.

APs whose activities are solely limited to swaps are automatically exempt from the examination requirements.

APs of CPOs that that would be excluded from the definition of commodity pool operator under 4.5(c)(2)(iii)(A) or (B) or exempt from registration under 4.13(a)(3) but for their swaps activities (i.e., the firm would meet the de minimis requirements if swaps were not included) will not be eligible to automatically claim the waiver. Instead, an AP's sponsor must send a signed request to NFA seeking a waiver based on these circumstances for its AP(s) from taking the Series 3 under NFA Registration Rule 401(e)(2)(ii).

Additional Proficiency Requirements

An individual may be required to fulfill additional proficiency requirements based on their positions or the types of business conducted.

NFA Branch Manager Examination (Series 30)

An individual who is a Branch Office Manager and an AP must pass the Series 30 within the two years preceding their application unless:

  • they have passed the Series 30 examination within two years of the date the application is filed;
  • they are currently approved as a Branch Office Manager;
  • they were approved as a Branch Office Manager and since the last date the applicant was withdrawn as a Branch Office Manager, there has not been a period of two consecutive years during which they were not either temporary licensed as an AP or registered as an AP; or
  • their sponsor is a registered broker-dealer who provides proof that they are qualified to act as a branch office manager or designated supervisor under the rules of FINRA.

 

Retail Off-Exchange Forex Examination (Series 34)

An individual seeking approval as a forex firm or forex individual must pass the Series 34 examination before engaging in off-exchange retail forex unless:

  • the applicant has satisfied the Series 3 or Series 32 proficiency requirement (as described above) and
    • NFA has received satisfactory evidence that the applicant has passed the Series 34 within two years of the date the application is filed or
    • since the date the applicant last passed the Series 34 there has been no period of two consecutive years during which the applicant has not been either registered as an AP or FB or an approved principal of a registrant; or
  • the applicant was registered as an AP, FB or an approved sole proprietor on May 22, 2008, and there has been no period of two consecutive years since that date during which the applicant has not been either registered as an AP or FB or an approved principal of a registrant.