"The National Futures Association"

Transcription

1 UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Expert Meeting on the Trade and Development Implications of Financial Services and Commodity Exchanges (Part I) Item 3: Trade and Development Implications of Commodity Exchanges 3 September 2007 "The National Futures Association" by Ms. Karen K. Wuertz Senior Vice President, Strategic Planning & Communications The National Futures Association, USA The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD Secretariat, nor do they imply the expression of any opinion whatsoever on the part of the secretariat of UNCTAD concerning the legal status of any country, territory, city or area, or of its authorities or concerning the definition of its frontiers or boundaries.

2 National Futures Association United Nations Expert Meeting on the Trade and Development Implications of Commodity Exchanges Geneva, Switzerland September 3, 2007

3 NFA s Mission To provide innovative regulatory programs and services that ensure integrity, protect market participants and help our Members meet their regulatory responsibilities. To be the model for regulatory organizations by providing the most efficient and effective regulatory environment possible.

4 NFA s Background Operating for twenty-five years Authorized by Congress to act as a selfregulatory organization for the futures industry Subject to oversight by the Commodity Futures Trading Commission and the Securities Exchange Commission

5 NFA s Background Governed by a Board of Directors comprised of public and industry representatives Staff of approximately 260 3,800 Member firms and 55,000 individuals Offices in Chicago and New York Not for profit; not a trade or lobbying association

6 Commodity Exchange Act Section 17 Mandatory Membership Compliance Rules Appropriate discipline Customer Arbitration Process Rules submitted for approval Perform registration functions

7 NFA Governance Section 17 Board must have at least 20% nonmembers Section 17-Assure fair representation in the adoption of rules and selection of officers and directors 25 Directors-Exchanges(6), FCMs/IBs(10), CPOs/CTAs(4), nonmembers(5) Executive Committee

8 Funding Initial funding provided by exchanges Section 17-Equitable allocation of dues Budget - $39 million Annual membership dues Transaction Assessment Fee Forex Dealer Member Fees CFTC Oversight Fee

9 Categories of NFA Membership Futures Commission Merchants (FCM) Forex Dealer Members Commodity Pool Operators (CPO) Commodity Trading Advisors (CTA) Introducing Brokers (IB)

10 SRO Functions Set standards Monitor for compliance with those standards Take disciplinary action when standards violated

11 NFA s Core Services Registration and Membership Screen firms and individuals Ensure knowledge and fitness standards are met

12 NFA s Core Services Compliance Conduct audits of our Members business operations Analyze our Members financial information Investigate irregularities and complaints Take disciplinary action when needed

13 NFA s Core Services Dispute Resolution Efficient and affordable systems to resolve disputes Offer arbitration and mediation alternatives Available nationwide

14 NFA s Core Services Education Assist membership in understanding and meeting regulatory responsibilities Help investors better understand trading opportunities and risks Provide staff with complete training curriculum.

15 Keys to NFA s Success Reliable and adequate funding Industry support Accountable for its activities Mandatory membership Responsive to changing business environment

16 NFA s Track Record Trading volume has increased exponentially Customer complaints have dropped substantially Firm insolvencies have decreased All while NFA has consistently taken on more responsibilities

17 Offering NFA s Services to Electronic Markets Industry s Changing Needs Experience and Qualifications Menu of Regulatory Services

18 NFA s Information Technology Background Affiliation Status Information Center (BASIC) Online Registration System FACTS 2000

19 NFA s Information Technology EasyFile and WinJammer Financial Statement Submission Risk-Based Audit Approach Online Dispute Resolution

20 CFTC Oversight Three year report card Subject to oversight by the Commodity Futures Trading Commission and the Securities Exchange Commission Rules reviewed and approved Disciplinary and registration cases reviewed Rule enforcement reviews Access to NFA databases

21 NFA/CFTC Dialogue Quarterly report Meetings with Commissioners after Board meetings Commissioners invited to Board meetings Regular staff meetings with CFTC divisions Referrals Cooperative Enforcement Efforts

22 International Reputation International Regulators Alert System Member of IOSCO s Consultative Committee Provide training to foreign markets and regulators in Chicago and abroad

23 NFA Contact Karen Wuertz Senior Vice President, Strategic Planning and Communications