NFANational Futures Association

Formed by members of the U.S. derivatives industry, the National Futures Association (NFA) is the self-regulatory organization for the U.S. derivatives industry, responsible for promoting accountability in the marketplace to ensure transparency, fairness, and integrity within the industry.

The Commodity Futures Trading Commission (CFTC) designated the NFA as a registered futures association, enabling the industry to create, implement, and monitor innovative regulatory programs that ensure the stability of derivatives markets, protect clients, and hold those who interact with clients accountable to Federal regulations.

NFA adheres to best practices of regulatory accountability surrounding the derivatives industry to promote and sustain confidence within the sector. When guidelines are established in regulatory frameworks to comply with the restructuring of client money and to protect actions made within the marketplace, they are clearly defined, and compliance practices are adhered to through dynamic approaches and decisions.Market participants can act responsibly in good faith, adhering to principles of transparency and accountability.NFA is committed to framing these actions in the same manner at all levels. These practices contribute to the constraints of trading market regulations and thus act as a framework for regulatory enforcement for each trade, protecting investors.

Background/History

In 1974, Congress established the Commodity Futures Trading Commission (CFTC) as an independent Agency charged with regulating futures and derivatives markets. The Act creating the CFTC also allowed for the establishment of registered futures associations, which gave the industry the ability to establish its own independence as a self-regulatory organization.

NFA was designated as a registered futures association on September 22, 1981, and began regulatory activities in 1982.In that time, NFA has evolved as a fundamental pillar of oversight for the U.S. derivatives industry.

Governance

NFA's primary governance and policy-setting authority is the Board of Directors.The governance structure is balanced by Member Directors, who represent the NFA membership, and Public Directors, who provide independent input regarding decision-making.

Mandatory Membership

Mandatory membership is the foundation of NFA's regulatory approach. By making all eligible market participants Members, the Derivatives Rules application homogenizes across the U.S.derivatives markets.It allows NFA to operate with regulatory accountability and self-regulation throughout the derivatives markets.

Funding and Oversight

NFA is funded by dues, registration fees, and assessment fees from Members and other users of the derivatives markets. Annually, the Board of Directors reviews and accepts the budget to ensure the integrity of operations and funding, in accordance with regulatory obligations.

For NFA's approach to regulatory accountability and the objectives of the organization to instill confidence within/throughout the derivatives industry, NFA remains in accordance with its responsibility of providing a high level of compliance and consistency towards a regulated market, with the theory that through transparency and trust in the marketplace participants make confident trading decisions that promote the same characteristics on the part of all participants.