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National Futures Association "NFA" Issues Guidance on Bylaw 1101 Compliance for Pending Introducing Brokers

On December 27, National Futures Association issued guidance for NFA members carrying accounts, accepting orders or handling transactions from an introducing broker (IB) whose NFA membership is pending in reliance upon no-action relief granted by the Commodity Futures Trading Commission. On October 11, CFTC staff granted no-action relief for market participants that become obligated to register as IBs solely based on their activity in IntercontinentalExchange and New York Mercantile Exchange products that are in the process of transitioning from swaps to futures and options contracts. To be eligible for the CFTC staff’s no-action relief, the market participant must have completed and filed a registration application with NFA on or before December 31.

Pursuant to NFA’s guidance, a member carrying an account, accepting an order or handling a transaction from these pending IB members will be considered in compliance with NFA Bylaw 1101 if the member obtains a written representation from the pending IB indicating that it meets the conditions set forth in the applicable CFTC no-action letter. The NFA member’s relief from Bylaw 1101 requirements will expire on the date that the IB becomes an approved NFA member or five days after the pending IB member receives notice that it may be disqualified from registration under the Commodity Exchange Act.

NFA Notice I-12-37 is available here.

©2014 Katten Muchin Rosenman LLP

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About this Author

Kenneth M. Rosenzweig, Katten Muchin Law Firm, Financial Institutions
Partner

Kenneth M. Rosenzweig focuses his practice on financial services matters, with an emphasis on the trading and clearing of financial instruments. Ken represents derivatives clearing organizations, designated contract markets and swap execution facilities, in addition to futures commission merchants, banks and other commercial participants in the exchange-traded and over-the-counter derivatives markets.

312-902-5381
James M. Brady, Katten Muchin Law Firm, Finance Attorney
Associate

James Brady concentrates his practice in financial services matters.

312-902-5362
Blake J. Brockway, Finance Attorney, Katten Muchin Law Firm
Associate

Blake J. Brockway concentrates his practice in financial service matters.

Mr. Brockway received his Bachelor of Science, with distinction, from Iowa State University in 2005. He received his Juris Doctor, magna cum laude, from DePaul University College of Law in 2009, where he was selected to the Order of the Coif. During law school, Mr. Brockway served a research staff member of the DePaul Business and Commercial Law Journal and his comment, "Applying Federal Securities Laws to Chapter 11 Claim Conversions," was published in Volume 7, Issue 4...

312.902.5438