Introducing Registration For Broker

As mentioned above forex firms will need to register soon. The Commodities Futures Trading Commission (CFTC) is charged with creating the forex registration rules and the National Futures Association (NFA) is charged with overseeing compliance and implementing the new rules. While the CFTC has not yet released proposed rules (there will be a comment period before any rules are actually implemented), the NFA has already begun the process of updating its systems and training staff to handle the new regulatory regime. In fact, the NFA has provided much of the public information on the what the rules may look like when passed.

The definition of a forex introducing broker (also known as a forex IB) is similar to a regular introducing broker, except that the forex introducing broker will introduce clients (generally managers and other introducing brokers) to forex dealer members (also known as FDMs) which are the firms which actually execute the off-exchange forex trading. [Note: the term forex dealer member is given to those firms which are registered with the CFTC as futures commission merchants and who only engage in off-exchange foreign currency transactions.] The Forex IB can be either an individual or a firm; each individual person of a firm will also deemed to be a Forex Associated Person (also known as a Forex AP). Both firms and individuals will need to through the introducing registration process with the CFTC through the NFA.

As we noted above the introducing registration rules have not yet been finalized so we do currently know the exact method of registration. However, the NFA has indicated that the registration process for Forex IBs will be substantially similar to a regular introducing broker. In most instances the firm will need to file a Form 7-R (for the firm) and a Form 8-R (for each owner and associate at the firm - ministerial type individuals will not need to register). Each person will also need to have passed various regulatory proficiency exams. The NFA has indicated that Forex APs will need to have passed both the Series 3 exam as well as a new exam called the Series 34 exam which will focus solely on the off-exchange foreign currency markets. Assuming that all of the above is in order, and all fees have been paid, the forex registration process is likely to take anywhere from 3 to 6 weeks.

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