Regulatory Oversight via the CFTC & NFA
The Commodity Futures Trading Commission (“CFTC”) attempts to make sure every
registrant abides by regulation or will hand out fines up to $500,000 and even ban
registrants from trading. The National Futures Association ("NFA") has a more active
role in monitoring everyone and attempts to make sure everyone abides by high business
standards, honor, and integrity. They can hand out fines up to $250,000, or also ban
members from trading. They also strictly regulate promotional material. Regarding
off-exchange transactions, the CFTC only regulates these markets for fraud;
this includes the off-exchange foreign currency market.
Clearinghouses & FCM’S On-Exchange Only Clearinghouses act as third parties to all futures transactions. If a buyer defaults on his/her payment, the clearinghouse becomes the buyer. By acting as a buyer for every seller, the clearinghouse guarantees the performance of all futures contracts. The FCM or Futures Commission Merchant is the individual or corporation that solicits or accepts orders for the purchase or sale of futures contracts. He is the person who accepts money, securities, or property, to margin or guarantee trades that have been accepted. (ex. Wachovia Securities, Bear Stearns, RCG, Morgan Stanley…et cetera…). The FCM is with whom you open an account.
CTAs, Commodity Trading Advisors A CTA is someone who, for compensation or profit, engages in the business of advising others, either directly or through publications, as to the value or advisability of trading in futures. McKinley Capital is a government licensed CTA trading firm. The firm simply follows trends in the futures and foreign exchange markets. As long as the markets have been they have trended. McKinley Capital uses the Turtle Trading System to trade Foreign Currencies on the off-exchange foreign currency market. The Turtle Trading System may be used to trade any market across the globe. For more information on the NFA or CFTC please visit www.nfa.futures.org or www.cftc.gov. The firm cannot trade futures on behalf of clients at this time.