what is the national futures association nfa 
the national futures association nfa is an independent self regulatory organization for the u s futures and derivatives markets designated by the commodity futures trading commission cftc as a registered futures association the nfa s mandate is to safeguard the integrity of the derivatives markets protect investors and ensure that members fulfill their regulatory obligations understanding the national futures association nfa the nfa operates at no cost to the taxpayer and is primarily financed by membership dues fees and assessments paid by members and other users of the derivatives markets nfa membership provides assurance to the investing public that all firms intermediaries and associates who conduct business with them on the u s futures exchanges must adhere to the same high standards of professional conduct the firms working in the industry must pay membership dues to the nfa which is how the nfa gets its money the nfa began operating in 1982 subsequent to the establishment of the commodity futures trading commission cftc in 1974 this legislation also authorized the creation of registered futures exchanges thereby facilitating the creation of a national self regulatory organization 1in addition to regulation of the u s futures market the nfa s duties and functions include registration compliance and arbitration it combats fraud and abuse in the futures markets through a combination of registration requirements compliance rules strong enforcement authority and real time market surveillance responsibilities of the national futures associationthe following are the primary responsibilities of the nfa registration and membership firms that conduct derivatives business need to register with the cftc and most also need to register with the nfa the cftc has given the nfa registration responsibilities 2rulemaking this involves deciding what are the industry s best practices and then mandating those practices for the whole industry enforcement and registration actions when rules are not obeyed the nfa takes disciplinary action against members member education and resources the nfa provides educational resources to its members in order that they can understand the rules and regulations and how to abide by them arbitration any futures or forex related disputes can be resolved through the nfa s arbitration program investor protection the nfa provides investors with resources before making any investment decisions outreach programs the nfa offers a variety of training programs to entities on request market regulation designated contract makers dcms and swap execution facilities sefs can obtain regulatory services from the nfa 1member firmsall futures professionals required to register must undergo a background investigation before they may register as of june 30 2022 the nfa has 3 107 members 3 member categories are as follows the nfa as a self regulatory organization has the power to search for and implement what it believes are best practices for the industry the nfa creates rules that its members must follow and has the power to impose fines or revoke the membership which could shut down a business of its members it offers an arbitration process to help customers and businesses settle disputes or come to a resolution on allegations of wrong doing membership duesthe nfa has many dues and fees and they vary depending on the type of member for example the membership dues for a tier 1 swap dealer are 1 3 million whereas for a tier 2 swap dealer the dues are 325 000 for an introducing broker the dues are 750 and for an introducing broker swaps firm the dues are 2 500 these are annual dues 6the financial requirement to register with the nfa is an adjusted net capital of 1 million and for a swap dealer it is 20 million 7if payment is late there is a fee of 25 if dues are not paid within 30 days of the date they are payable then membership is withdrawn 6real world examplein 2019 based on complaints filed in 2018 east west global llc and two individuals at the firm were fined and one of the individuals had their nfa membership revoked for five years 8the firm and the two individuals were charged for using deficient promotional material deficient sales practices and failing to meet the high standards of commercial honor among several other charges 8one of the individuals was ordered jointly along with the firm and severally to pay a 75 000 fine the firm was also ordered to fix the issues addressed in the complaint 8the other individual following a settlement offer agreed not to apply for nfa membership or associate membership for five years after five years if he reapplies for membership he will need to immediately pay a 90 000 fine 9who does the nfa regulate the nfa regulates all qualified brokers futures merchants commodity pool operators swap dealers exchanges commodity trading advisors and retail foreign exchange dealers that deal in the futures markets 