Registration
Forex Registration
Overview
Firms which provided investment advice to pooled investment vehicles trading in spot forex (the off-exchange foreign currency markets) are deemed to be “forex commodity pool operators” or “forex cpos.” Like regular CPOs which must be registered with the United States Commodities Futures Trading Commission (CFTC), forex CPOs will also need to be registered with the CFTC. Also like a regular CPO, a forex CPO will also need to become a member of the National Futures Association (NFA).
Note: if a forex CPO also provides advice to separately managed accounts, the firm would also be a “forex commodity trading advisor” or “forex CTA” and be subject to registration like a traditional CTA.
When?
Congress has charged the CFTC with promulgating regulations which would require forex CPOs to register. However, the CFTC has not yet promulgated these regulations. It is expected that the CFTC will promulgate these regulations (in proposed form first) in the first half of 2009. It is further expected that once the regulations are proposed by the CFTC they will be subject to a comment period prior to finalization. In the past this has been a three to six month process.
How, and How Long?
Forex CPOs will go through a similar registration process as regular CPOs (see CPO registration). This means that forex CPOs will need to do the following
- Submit a form 7R (for the firm)
- Submit a form 8R (for all owners and associated persons of the firm)
- Submit filing fees
- Submit fingerprint cards (owners and associated persons)
- Pass regulatory exams (Series 3 exam and Series 34 exam)
Generally you will need to have a forex compliance firm prepare and submit the above materials to the NFA on behalf of your firm. The registration process can take between two and four weeks and potentially longer if the associated persons have faced regulatory issues in the past. After registration is complete the firm will need to make sure that its forex disclosure documents have been approved and reviewed by the NFA prior to opening customer accounts (once the CFTC regulations are effective).
Disclosure Documents
Each firm will need a forex disclosure document ________which provides potential forex investors with a description of the forex investment program and all of the important regulatory information about the firm.