Alert September 04, 2012

NFA Proposes Registration Requirement for “Swaps Firms”

The National Futures Association (the “NFA”) submitted to the CFTC a proposal to amend the NFA’s Bylaws and Registration Rules to require any futures commission merchant, introducing broker, commodity pool operator, or commodity trading advisor that engages in activities involving swaps subject to the CFTC’s jurisdiction to seek NFA approval to act as a “swaps firm.”  Under the proposal, an individual who engages in swaps activities on behalf of a swaps firm would have to be approved by the NFA as a “swaps associated person,” and at least one of the firm’s principals would have to be approved as a swaps associated person for the firm to be approved as a swaps firm. 

A swaps associated person would not be required to pass the Series 3 examination (also known as the National Commodity Futures Examination), or any other proficiency exam, if the person’s covered activities are limited to those involving swaps.  The NFA explained in the notes accompanying the proposal that none of the existing proficiency examinations test knowledge relevant to swaps activities.  The NFA stated that it had not ruled out creating such an examination, but would not make a decision on that issue until it had more experience with its members’ swaps activities.  The proposal became effective September 1, 2012.