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Alternative Market Briefing

Other Voices: CTA/CPO capital requirements; more harm than good?

Friday, February 21, 2014

By: James Bibbings, President, Turnkey Trading Partners

In late January 2014 the National Futures Association ("NFA") announced to its membership they were: "…reviewing the current regulatory structure applicable to Commodity Pool Operator ("CPO") and Commodity Trading Advisor ("CTA") operations. In particular, NFA is looking at ways to strengthen the regulatory structure governing CPO operations to provide greater protection for customer funds… [and] exploring ways to ensure that CPOs and CTAs have sufficient assets to operate as a going concern."

NFA then solicited input from its membership (now the general public) regarding the concept of imposing a capital requirement on its CPO and CTA members for the first time. They also requested comments on a variety of other proposed customer protection measures. To direct the comments NFA provided a list of questions covering a wide range of topics. Over the past month Turnkey Trading Partners has spent many hours talking to our clients and contemplating this proposal. Based on our experience and research the following presents our perspective on the most important of these questions.

Basis for Opinion

Turnkey’s perspective and role within the commodity futures industry is unique and valuable. Originally formed by a former NFA supervisor, the company was named by Hedgeweek as North America’s Best Regulatory Advisory Firm in 2013. This award was won in part because of Turnkey’s breadth of servic......................

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