Swaps Proficiency Requirements

Earlier this year, the National Futures Association (NFA) announced that individuals registered as associated persons (APs) of NFA members that engage in swaps activity (for example, commodity pool operators (CPOs), commodity trading advisors (CTAs), futures commission merchants (FCMs) and introducing brokers (IBs)) will need to meet new Swaps Proficiency Requirements.

Typically, APs of registered CPOs are required to take the Series 3 Exam.  When the NFA amended its registration rules in response to the Dodd-Frank Act, it exempted from that requirement APs of swaps firms whose futures activities were de minimis.  The NFA acknowledged that the Series 3 was not relevant to swaps activities and announced its plan to develop proficiency requirements specifically for APs of swaps firms.

The deadline for satisfying the new Swaps Proficiency Requirements is January 31, 2021.  APs will be able to access and take the exam online beginning January 31, 2020.  There are two “tracks,” the Long Track and Short Track.  Swaps APs of registered CPOs and CTAs are required to satisfy the Short Track (i.e., a shorter exam).

Each NFA member with APs required to meet these requirements must designate at least one Swaps Proficiency Requirements Administrator (SPR Admin) who will coordinate enrollment and track progress.  An NFA Member may designate an SPR Admin on or after November 1, 2019.  The NFA will email specific instructions and the relevant link to members on November 1, 2019.

The NFA is offering webinars regarding these new requirements.  Information about those webinars is available at  https://www.nfa.futures.org/members/member-resources/files/webinar-swaps-prof-admin-training.html.

FAQs regarding these requirements are available at  https://www.nfa.futures.org/faqs/registrants-membership-app/swap-proficiency.html.

If you have any questions, please contact one of the attorneys in the Investment Funds & Advisers Group at Shartsis Friese LLP:  John Broadhurst, Geoffrey Haynes, Carolyn Reiser, Neil Koren, Jim Frolik, Christina Hamilton, David Suozzi, Anthony Caldwell, Joan Grant or Lyn Roberts.