Registration and Proficiency

FCMs and IBs Dual registration required Any firm already fully-registered as both a broker-dealer and an FCM or IB has no additional registration requirements

FCMs and IBs Notice Registration as a Broker-Dealer Must be: –Fully-registered with the CFTC as an FCM or IB –A Member of NFA

Register using Form BD-N Exempt from duplicative requirements of the Securities Exchange Act Not required to be members of NASD May not do any other securities business requiring registration FCMs and IBs Notice Registration as a Broker-Dealer

Broker-Dealers Notice Registration as an FCM or IB Must be: –Fully-registered with the SEC as a broker-dealer –A member of NASD

Register using Notice Form 7-R Exempt from duplicative requirements of the Commodity Exchange Act Not required to be Members of NFA May not do any other futures business requiring registration Broker-Dealers Notice Registration as an FCM or IB

Salespeople and supervisors only need one registration

Money Managers Dual registration is not automatically required

Registered Commodity Pool Operators SEC registration requirements depend on the amount of securities business conducted SEC exemption for “hedge funds”

CFTC registration requirements may apply if a fund trades even one security futures contract No exemption for hedge funds Other exemptions may apply Registered Investment Companies & Hedge Funds

Advisors Commodity Futures Modernization Act of 2000 provides exemptions for registered CTAs and Investment Advisers

Registered Commodity Trading Advisors SEC registration not required: –Registered with the CFTC as a CTA, –Does not primarily act as an investment adviser, and –Does not give securities investment advice to a registered investment company or a business development company

SEC-Registered Investment Advisers CFTC registration not required: –Registered with the SEC as an investment adviser, –Does not primarily give personalized advice regarding or manage accounts trading regulated futures contracts, and –Does not advise funds about or make trades for funds in regulated futures contracts

Case Study Registration

Proficiency Series 3 and Series 7 registrants can qualify through training if registered within six months after security futures contracts begin trading

Proficiency NFA / NASD / IFM training program –Web-based –Five modules Any other training program that covers the required content

Training must be completed BEFORE engaging in security futures activities

Member must maintain records showing who took the training

Proficiency Later registrants must qualify through testing: –Series 3, or –Securities exam yet to be determined

Designated Principals All FCMs, IBs and broker-dealers must have one or more designated security futures principals (DSFP) to oversee security futures activities –Series 30 for NFA-only Members –Series 4 or 9/10 for NASD members

Designated Principals: NFA (Only) Members Current supervisors and persons qualified as branch office managers within six months: –Can qualify through training New principals: –Must qualify by testing (Series 30)

Designated Principals: NASD Members Current options principals and those who become options principals within six months: –Can qualify through training New principals: –Must qualify by testing (Series 4 or Series 9/10)

Case Study Proficiency

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