Note 10 - series 3 PDF

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Summary

series 3...

Description

Cta Advise more than 1 pool without registering As a CPO Yes

CTA disclosures

Business exp 5years trading perfm 5years & current year.

Criminal ,civil, adm action 5years.

Customer account material change

15 days or when aware

Customer agreement Gives right to liquidate portion or all positions if margin is not met. & if customer dies

Customer protection procedure FCM must separate customer assets from the firms & firm cannot use customer funds for business or own trades

Decisions by ALJ appealed by?

Commission and then US court of Appeals

Delivery of FCF Depositing appropriate amount of foreign currenty in any destined depository in currency home country

Department of compliance Conducts member audits & examinations investigate complaints & violations of NFA regulations handles firm surveillance and rule enforcement

Dilution table factor management fees

Director of compliance

No not charged by CTA for initial operating period.

Report valid complaints to regional committee

Disciplinary process Director of compliance submits violation to business conduct committee Business committee compliant issued written outline of violation to member. Member must answer & 30days can request a hearing before a NFA Hearing Panel If not settle panel issues decision . Compliant may Appel to NFA Appeals Committee which is Board members created to hear matters Appeals Committee decision is FINAL subject to review by CFTC fines can't exceed 250k

Disclaimers Using hypothetical results, less than 1 yr exp trading customer accounts ,1year or less exp allocating assets

Disclosure - CTA

Business activity last 5years

Past trading perfm If has no trading experience as a cta

Disclosure appearance Tabular form columns on Front page -title DILUTION TABLE with base figure for comparison purposes =net proceeds minus fees to show capital available for trading

Disclosure exceptions CTA disclosed all cost to customer "writing" Member of NFA Not an individual "corp,partnership"

Discretionary account Must b in writing, grant power of attorney, Ap must have 2yrs experience as a RcR or b a CTA. Firms must supervise INTENSELY must b approved by a supervisor after order is FILLED. MUST REGULARLY review activity.MUST KEEP RECORD OF REVIEWS.

Dividend rise on SF Interest rate increase/ stock

Security futures should decrease relative to price of stocks

Increase with it

Do business with suspended members?

No

Exchange committee To protect interest of members and customers

Exchange margin requirements Must report activity daily 1936 act let exchanged set margin requirements . Under extra circumstances CFTC can set requirements

Exchange trade executions

Exchanges

Open outcry bid ,offers

Select commodities they seek designation as contract market .

Propose specify contract terms Specifics price limit T-bond =3points

Execute trades on exchange floor

Only floor traders ,brokers registered with CFTC

Exempt CTA Advice affect cash market,Ap acting 4 CTA ,advice less than 15 clients during 12mths. IB, Ltm, non profit farm/trade

Exporters

Short hedger "out"

American export paid in FC Foreign getting paid in us

FCM &IB fees Must b made to customer b4 account is open. All fees cost and charges. In writing how & when they apply and amounts

FCMS verify info?

Fed funds

No rely good faith info is true

Excess reserves of commercial banks & financial institutions

Find errors on disclosure dock

Must be corrected in 21 days after discovery

Firm Records Copy of monthly statements, daily record,property/securities deposited, account card,

Firm records time

5yrs and must b easily accessible for 2yrs

First party to review complaints

Director of compliance

Floor gov committee Observes trading from pulpits to ensure open market

Front running Putting orders ahead of customers

Fungibility

Trade same instrument interchangeably across exchanges

Ex options on stocks

Future exchanges Must b licensed with CFTC. CFTC designates particular exchanges as contract markets for specific commodities

Future option disclosure Must mention loss of entire premium. Seller unlimited risk, separate option document or generic disclosure document with both

Fx

Trade on IMM of CME

Options on currency trade IOM

Hold customers assets-CTA No unless organizations is a FCM register as a CTA

How many days does a bona hedger have to notify CFTC of intent exceed position limit? At least 30days b4 establishing

Hypothetical track record

Importers

3 mths

Long hedge "in"

American imports getting paid in foreign Currency Foreign export paid in Us

Infomercials Popular form of promo must have disclaimer at beginning & end of show

Know your customer Annual income, networth, investment exp & investment goals

Less than 12moths cpool Separate pool perfm

Entire operating history ,CPO history of all other pools past 3yrs.

Hypothetical trading is a pool track record must b disclosed

Mediation

Settlement process no1 wins cheaper

Indy 3rd party works to find solution No solution proceed to arbitration

Member responsibility action Act immediately certain violations detrimental to public interest

Member responsibility action Require approval of NFA president Board of directors Or executive committee

Members & Ap share customers profits& loss?

Misleading words

NFA

Yes with Written consent from the customer

Proven & unlimited shouldn't b used

1976 -Self regulatory regulates all persons conducting futures business with the public.

NFA arbitration

Dispute involving any other parties,trade complaints & charges

NFA Form 8-R

10yr Employment history 5yr residential 4 AP

NFA membership?

FCMS,IBs,CPO,CTA,AP OF ALL

NFA rule 2-29 promotional material Sales literature ,seminars, advertising newspapers radio tv,newsletters,sales scripts ,internet material , performance charts & graphs

Oco

Option clearing corp

Clears security options CME also clears SF

Offer to settle No admit or deny of violation

Omnibus account Intense supervise used by intro member to execute clear their customer trades not in their name

Options promo Must disclose limited risk on long positions only must disclose can lose entire premium and uncover calls unlimited risk

Part 2 Summary action taken by president with executive committee to protect the markets /members /customers No practice to hold hearing b4 it's taken

Perfm record & disclosure updates Every 9 months no value older than 3months must b submitted to CFTC at least 21 days b4 public

Position limits Bona fide hedgers don't have position limits only to speculators

Promo material & oral communications

Promoting selective trades

Cherry picking

QEP Qec Clients

Subject to same standards rule 2-29

Qualified eligible participants

Qualifications SF

No new exam registered b4 or 6 months of SF trading

But must complete education course online New registrants will face revised additional testing

RcR

Registered commodities representative

Regional business conduct committee penalties

Expulsion

Suspension Barring 4ever Reprimand Fines up to 250k Cease & desist action

Regional business conduct committees Conducts investigations by CFTC request ,discovery of NFA , or by order of NFA director of compliance that a violations has occurred ,may have occurred, or about to.

Register as a CPO -CTA pools

Not required unless engaged in forming or operating commodity

Reporting limits Max net number of contracts one trader or customer can hold on same side of a comd without having to file daily report(all long & short positions options also)

Respondent

Party charged

Respondent response time to complaint admission of guilt & waive hearing

Responsibility of promo material

Written answer to NFA within 30days of date or

The member. The Ap prepare the AP & member

Review appeals committee action

Review of promo material review takes up 2 21days.

Through CFTC within 30days of any action by committee a

NFA does require to submit unless disciplinary action but will

Risk disclosure Must b signed b4 trading. Explain risk of trading futures and potential loss of all and addition funds. They understand . Must b kept in customers files.

Say the approved ,endorsed by NFA No

Sec or CFTC regulations

Both sec and state regulations as well as CFTC

Seek injunctive relief CFTC only not NFA

Sell option

Opening sale

Closing purchase

Single stock price formula

Ssf price =stock price

1+it -dt I= broker loan interest rate D = rate of dividends annualized T =time to mature

Sipc

Securities investor protection corp

Protects security customers from. Broker dealer failure

Special accounts

Weekly reports of accounts exceeding reporting levels

Statue of limitation Complaints must be filled within 2yrs of date violation occurred or 2yrs the offended party should have known about violation.

Stock index options, future option ssf

Stock splits

Not fungible

Position will double

Ex 2-1 L 100 shares now have 2 100 share at 50

Supplemental agreement account

Fund transfer form - transfer between securities account & futures

Terminate membership while under investigation ? No

Termination of ap

File a 8T form

Timetable for promo material requirements Each member keep file of promotional item and copy of supervisory review & approval .Readily assessible 3yrs from last used date & maintained total of 5yrs

Trading halt

Stock is halted so in SF

Futures NBSI stops when stocks 50% or more of index market cap

Truth & balance Promo material Must b accurate probability of profit must have equal statement covering risk of loss

TV & radio promo

If you "pay" it's promo

U.S. & foreign contracts

Must b segregated

Unique fundamentals Fish meal sub for soy meal to feed chickens wheat is not to expensive Farmer grow soy, corn, cotton same land not wheat Soybean crop sept1-August 31

Cattle & hog killed in autumn Sugar b raw or refined Crb index basket of commodities Eggs shipped truck Barley cocoa metric tons Delivered frozen hogs, ice chicken, oj Heating oil primary's residential heating

Unique margins requirements CBOT expands 150% price limit 3 or more consecutive contracts in contract year One front month certain commodities Soybean complex -bean,oil,meal Close limit price 2 trading day Auto next two increase Addition limit close don't auto increase limits Price revert to normal close short of expanded limits

View evidenceHas to make request and pay 4 copy's or go by NFA view in person

Wash sales

No change of ownership

Who regulates stock index futures & stock index futures options? CFTC AND NOT THE SEC THEY ARE FUTURES

Who to file appeal with after decision? Time Appeals committee within 15days

Wk Oh Bo

May wheat

March oats Soy oil...