CFTC Registrations and NFA Membership
Chapters in this video
- 0:00 The CFTC versus NFA split: who registers and who sets conduct rules
- 2:40 Seven registration categories: four firm-level, three individual-level
- 3:17 Associated Person defined by activity, not by title
- 4:01 FCM versus IB: the money test that drives the exam
- 5:52 Floor Broker versus Floor Trader: broker for others, trader for self
- 6:26 The CTA exemption two-part test and the public-holding-out trap
- 7:55 The NFA membership net: how compliant firms freeze out rogues
- 9:32 Rapid-fire exam recap
What this video covers
- Why the Commodity Futures Trading Commission (CFTC) registers under the Commodity Exchange Act (CEA) but does not write day-to-day conduct rules
- Why National Futures Association (NFA) membership is required alongside CFTC registration for any public-facing firm, and what happens if one is missing
- The seven registration categories: Futures Commission Merchant (FCM), Introducing Broker (IB), Commodity Pool Operator (CPO), Commodity Trading Advisor (CTA), Associated Person (AP), Floor Broker (FB), and Floor Trader (FT)
- The money test that separates an FCM from an IB: only the FCM holds customer funds, carries accounts, and clears trades
- Why an Associated Person is defined by activity (soliciting orders, customers, or funds, or supervising same) not by title
- The phrase "broker for others, trader for self" to keep Floor Brokers and Floor Traders straight
- The two-part Commodity Trading Advisor (CTA) exemption test: 15-person limit AND no holding out to the public, and why both prongs must be satisfied
- How the NFA membership net freezes out unregistered firms by forbidding compliant members from clearing trades or holding funds for them
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