Deriv Account Registration For Futures Trading
Derivatives are financial instruments that allow traders to manage their risks. These could include commodities, stocks, bonds, interest rates and currencies.
As a derivatives market participant, it is your duty to ensure you abide by all applicable regulations and standards. Registering your Deriv Account correctly is one of the best ways to guarantee you're conducting business correctly.
Designated by the CFTC as a registered futures association
In 1974, Congress created the Commodities Futures Trading Commission and authorized registered futures associations. NFA was officially designated by CFTC on September 22, 1981 and began conducting regulatory operations two years later in 1982.
The CFTC's mission is to protect customers from fraud and abuse in the derivatives markets. They strive to safeguard customer funds, promote an open and competitive futures market, and guarantee its resilience and financial soundness. Furthermore, they investigate and prosecute commodities fraud such as foreign currency schemes or energy manipulation, working closely with state and federal authorities to bring criminal and other actions against those involved in violations of CFTC regulations.
As the industry's self-regulatory body, NFA upholds ethical standards and rules of conduct for its Members and Associates. These regulations cover everything from sales practices to recordkeeping, reporting, risk disclosure, discretionary trading, and fee disclosures.
The NFA also has the authority to take disciplinary action against any Member or Associate who breaches NFA rules, placing customers, the futures markets, or other Members at risk. Penalties include expulsion, suspension and fines of up to $250K per violation.
NFA provides a wealth of reference materials to ensure all Members and Associates are aware of their responsibilities, from an FAQ page to an online resource library and series of webinars covering registration to risk disclosure. To guarantee compliance with NFA regulations, these resources include a Frequently Asked Questions page, online resource library, as well as an array of reference materials for Members and Associates alike.
NFA requires all firms, intermediaries and associates engaged in futures market business in the United States to register with them. There are a few exceptions for non-U.S. firms trading only futures contracts and options traded on foreign exchanges.
NFA strives every day to safeguard the integrity of the derivatives markets
Derivative markets are essential to many businesses and people. They assist manufacturers, retailers, farmers, utility companies, and airlines manage risk while helping to secure fuel costs.
Derivative markets are overseen and monitored by the Commodity Futures Trading Commission (CFTC), along with other agencies which enforce laws and prevent market manipulation. They also assess financial service provider competence and conduct regular inspections to verify it.
Retail investors must open a commodity futures account with an FCM that has received and signed a disclosure statement, which informs them of the risks involved with trading futures. Furthermore, this requires them to carefully consider their individual risks and objectives prior to making any investment.
In addition to these regulatory initiatives, the CFTC collaborates with self-regulatory organizations to guarantee retail customers receive thoughtfully designed disclosure guidance. This education helps them make informed decisions about derivatives products.
Finally, CFTC staff monitors the markets to detect and report market abuses. This includes referring traders to enforcement when they are suspected of breaking Commission rules.
To accomplish this goal, the CFTC collaborates with other self-regulatory organizations to promote compliance with Commission rules and regulations as well as educate market participants about compliance obligations.
For the CFTC to fulfill its mission, it must be tough on those who break the rules while remaining fair and consistent with its approach in enforcing them. Furthermore, it must work to protect consumers and safeguard U.S. market integrity at the same time.
NFA works with the CFTC
NFA is an industry self-regulatory organization funded largely through membership and assessment fees from firms operating in derivatives markets. It sets rules that members must follow, with penalties or revocation of membership (which could shut down a business) imposed if they break those regulations.
The NFA regulates a range of entities, such as futures commission merchants (FCMs), exchanges and swap dealers. Its mission is to protect the integrity of the market, safeguard investors and guarantee members adhere to their regulatory responsibilities.
For instance, NFA requires forex dealer members to file annual reports with the CFTC. Furthermore, they must share details about their compliance programs and notify any violations that occurred.
NFA provides arbitration services for customers and businesses who disagree with a member's practices. It also investigates complaints of wrongdoing and takes disciplinary actions against violators.
Another way NFA cooperates with the CFTC is by providing exemptions and exclusions for certain entities that don't need to register with the Commission. These decisions are usually based on specific facts.
Non-US firms who claim an exemption or exclusion from CFTC registration must reaffirm whether this status remains unchanged annually. The affirmation filing must be submitted to NFA no later than 60 days following the end of each calendar year.
Non-US companies that claim an exemption from CPO or CTA registration under CFTC rules must reaffirm this exemption annually by submitting affirmations to NFA no later than March 1, 2023.
NFA staffs are constantly on the lookout for ways to support the derivatives market and its participants. For instance, following COVID-19 they have consolidated staff letters on webpages and created customer advisory material in an effort to prevent fraudulence.
NFA provides arbitration services
The National Futures Association (NFA) offers arbitration services to its members and customers, helping to settle disputes that arise in the derivatives industry. Furthermore, NFA acts as a regulatory body, enforcing rules and regulations on member firms and traders alike.
NFA is a self-regulatory organization that relies largely on membership dues, fees and assessments paid by members and users of derivative markets for funding. Its budget is reviewed and approved annually by its Board of Directors.
The NFA is composed of qualified brokers, commodity pool operators (CPOs), futures commission merchants (FCMs), commodity trading advisers (CTAs), swap dealers, exchanges and retail foreign exchange dealers who deal in futures markets. As a self-regulatory organization it sets standards and enforces them to safeguard consumers, investors and the futures markets.
In addition to its enforcement initiatives, NFA provides investors with a wealth of resources. One such resource is the BASIC tool, which offers valuable data that can assist investors in making informed investment decisions.
NFA's mission is to protect futures markets and assets held in customer derivative accounts. As such, it has the authority to issue fines or suspend membership to those who engage in activities that could put customers, the markets or other NFA members at risk.
Recently, the NFA issued an Interpretive Notice outlining new disclosure requirements for members who engage in spot market virtual currency or virtual currency derivative transactions. These requirements will become effective as of October 31, 2015.
NFA provides investors with a variety of resources
The National Futures Association (NFA) offers a variety of resources to assist investors in making informed decisions. One such tool, BASIC, allows them to conduct due diligence on both companies and individuals before investing.
The NFA also works to educate investors on the risks associated with trading derivatives. It provides educational materials such as webinars and articles that outline the fundamental concepts behind futures and options trading.
NFA also urges investors to check the background of financial professionals before investing. Through EDGAR or SmartCheck, investors can search a trader's or broker's corporate history and stay abreast of fraud schemes.
Furthermore, the NFA provides arbitration services to resolve disputes. This includes cases involving futures traders and brokers as well as customers of those firms.
The NFA requires all qualified futures professionals to undergo a background investigation prior to registering with the organization. This is done to guarantee traders are not engaging in fraudulent activities and acting within legal boundaries of their business activities.
If a potential investor is uncertain of the background of a trader or broker, they should seek independent advice from an attorney, accountant or investment adviser. Furthermore, they should check with the SEC, CFTC and state securities regulators to guarantee that no legal proceedings have been initiated against the trader or broker.
The NFA is a self-regulatory organization that sets rules and regulations for its members, then enforces them with fines on those found breaking them. This ensures markets remain fair and transparent. Furthermore, the NFA offers education programs as well as dispute resolution services to its members.