Key takeaways
– The National Futures Association (NFA) is the independent, self‑regulatory organization for the U.S. futures and most derivatives markets, designated by the Commodity Futures Trading Commission (CFTC). (NFA; CFTC)
– The NFA’s core functions: registration, rulemaking, compliance surveillance and enforcement, arbitration, member education, and market regulation services for DCMs and SEFs. (NFA)
– NFA is financed by member dues and user fees (not taxpayer funds). Membership signals that a firm or individual is subject to uniform professional standards. (NFA)
– As of June 30, 2022, the NFA had 3,107 members. Member dues and financial requirements vary widely by member type (examples below). (NFA)
What is the NFA?
The National Futures Association (NFA) is an independent, nonprofit, self‑regulatory organization for the U.S. futures and derivatives markets. The CFTC designated the NFA as a registered futures association and gave it statutory responsibilities including registration of market participants, rulemaking, compliance monitoring, discipline, and investor protection. The NFA began operations in 1982 and is funded by dues, fees and assessments paid by members and market users. (NFA; CFTC)
Primary responsibilities of the NFA
– Registration and membership: process applications and register firms and associated persons required to register by the CFTC. (NFA)
– Rulemaking: develop and adopt industry rules and best practices for members. (NFA)
– Surveillance and enforcement: monitor activity, investigate rule violations and impose disciplinary actions (fines, suspensions, membership revocation). (NFA)
– Arbitration and dispute resolution: administer arbitration between customers, members and associates for futures and forex disputes. (NFA)
– Education and outreach: provide training, compliance resources and guidance to members and the public. (NFA)
– Market regulation services: offer regulatory services to designated contract markets (DCMs) and swap execution facilities (SEFs). (NFA)
Who does the NFA regulate?
The NFA regulates the universe of market participants that trade or provide services in U.S. futures and many swap markets, including:
– Futures commission merchants (FCMs) and introducing brokers (IBs)
– Commodity pool operators (CPOs) and commodity trading advisors (CTAs)
– Swap dealers and major swap participants (as defined by CFTC rules)
– Retail foreign exchange dealers
– Associated persons (individuals who solicit, supervise, or advise clients for NFA members)
– Exchanges and other market entities that obtain NFA services (e.g., certain SEFs/DCMs) (NFA; CFTC)
How many members are in the NFA?
– Total members: 3,107 (as of June 30, 2022). Membership counts and categories are available from NFA membership directories. (NFA)
Who needs to register with the NFA?
Any firm or individual required by law or CFTC regulations to register to conduct futures, swap, commodity pool or forex activities in the United States must apply for registration and most will register through the NFA. Typical registrants include FCMs, IBs, CPOs, CTAs, swap dealers, retail forex dealers and associated persons. All prospective registrants undergo background investigations. (NFA)
Typical membership categories (examples)
– Introducing broker (IB)
– Futures commission merchant (FCM)
– Commodity pool operator (CPO)
– Commodity trading advisor (CTA)
– Swap dealer (Tiered dues and capital requirements)
– Associated persons (APs) — individuals who are registered representatives for member firms (NFA)
Membership dues and financial requirements (examples)
– NFA funds itself through member dues, fees and assessments; dues vary by member type. (NFA)
– Examples of annual dues (illustrative, from NFA schedules):
– Tier 1 swap dealer: $1,300,000
– Tier 2 swap dealer: $325,000
– Introducing broker: $750
– Introducing broker (swaps firm): $2,500
– Financial capital requirements (examples):
– Adjusted net capital requirement for certain registrants: $1,000,000
– Swap dealer financial requirement example: $20,000,000
– Administrative rules for dues:
– Late payment penalty: $25
– If dues are unpaid 30 days after due date, membership may be withdrawn. (NFA)
Real‑world enforcement example
– In 2019, based on 2018 complaints, East West Global LLC and two individuals were disciplined for deficient promotional material, deficient sales practices and failing to meet high standards of commercial honor. Sanctions included fines and a five‑year membership bar for one individual; one individual agreed to a five‑year bar and a future $90,000 payment if reapplying. This illustrates the NFA’s enforcement reach and remedies. (NFA disciplinary matter)
Practical steps — How to become an NFA member (for firms and individuals)
1. Determine the registration type:
– Identify whether you are an FCM, IB, CPO, CTA, swap dealer, retail forex dealer, or associated person. Use NFA guidance to classify your activity. (NFA: Who Has to Register)
2. Prepare documentation:
– Corporate formation documents, ownership and control information, business plan, audited or reviewed financial statements, compliance policies, supervisory procedures, AML procedures, and proof you meet net capital requirements. (NFA: Registration and Membership; Financial Requirements)
3. Background investigations and fingerprints:
– Gather individual background information for principals and associated persons. Expect background checks and disclosures of disciplinary or criminal history. (NFA: Associate Person Registration)
4. Apply electronically:
– Submit the registration application using the NFA’s electronic filing system and pay applicable application fees and initial dues. Follow directions in the NFA’s online registration portal. (NFA: Registration and Membership)
5. Designate key personnel:
– Appoint a Chief Compliance Officer (CCO) and other required supervisory staff; register associated persons where applicable. (NFA rulebook and guidance)
6. Respond to NFA requests:
– Cooperate with any requests for additional information or interviews during the review.
7. Obtain membership and comply with ongoing obligations:
– Once approved, maintain required capital, pay annual dues, file periodic reports, adhere to NFA rules and be prepared for compliance examinations. (NFA)
Practical steps — Ongoing compliance and best practices (for members)
– Maintain and document an effective compliance program (written policies and procedures, CCO oversight).
– Keep accurate books and records, preserve communications and marketing materials and archive trade records.
– Ensure all promotional and sales materials comply with NFA advertising rules; pre‑approve materials where required.
– Conduct background checks and training for associated persons; supervise sales and trading activity.
– Monitor and maintain required adjusted net capital and financial reporting.
– Pay dues and assessments on time (avoid the $25 late fee and risk of membership withdrawal after 30 days’ nonpayment).
– Use NFA resources and training programs to stay current on rule changes. (NFA)
Practical steps — For investors (how to use the NFA to protect yourself)
1. Check membership status and background:
– Use the NFA BASIC public search tool to verify whether a firm or associated person is an NFA member and to view disciplinary history and registration status. (NFA Membership & Directories)
2. Review disclosures:
– Ask for and review firm disclosures, account agreements, and any arbitration/complaint history.
3. Understand dispute resolution:
– If you have a dispute, consider filing through NFA arbitration — it is the standard forum for futures/forex disputes. Follow NFA arbitration filing rules and deadlines. (NFA Arbitration)
4. Ask questions:
– Ask prospective brokers about their supervision, compliance programs, and financial condition. If something seems off, consider alternative providers or notify the NFA. (NFA investor resources)
Practical steps — If you face an NFA investigation or complaint
1. Preserve documents and communications immediately.
2. Retain counsel experienced in NFA/CFTC matters.
3. Respond timely to NFA requests; cooperation can affect outcomes.
4. Consider remedial compliance changes and communicate remediation to the NFA if appropriate.
5. Use the NFA’s arbitration and disciplinary processes to resolve or contest claims. (NFA disciplinary rules & processes)
What the NFA can do when rules are violated
– Impose fines and monetary penalties.
– Suspend or bar members or associated persons from the industry.
– Require remediation (fixing deficient practices or materials).
– Refer criminal matters to law enforcement if appropriate. These actions protect market integrity and investor confidence. (NFA enforcement)
Fast fact
– The NFA operates without taxpayer funding; it is financed by member fees, dues and assessments. (NFA)
Sources
– National Futures Association (NFA): “About NFA”; “Who Has to Register”; “Membership and Directories”; “Associate Person (AP) Registration”; “Membership Dues and Fees”; “Rulebook Table of Contents. Financial Requirements”; “Registration and Membership”; disciplinary matter pages (East West Global, LLC).
– Commodity Futures Trading Commission (CFTC): “Final Rules Regarding Further Defining ‘Swap Dealer,’ ‘Major Swap Participant,’ and ‘Eligible Contract Participant’.”
Where to go next
– Firms: Review the NFA registration guidance and begin the electronic application process on nfa.futures.org; consult experienced compliance counsel if you are a new registrant or swap dealer.
– Investors: Use NFA BASIC to verify firms and individuals, and contact the NFA if you suspect misconduct.
If you want, I can:
– Walk you through a sample checklist tailored to your business type (IB, CTA, CPO, swap dealer).
– Provide a template list of documents typically required for an NFA registration application.
– Show how to look up a firm or person in NFA BASIC and interpret the results.