Proficiency Requirements

Futures Proficiency Requirements

National Commodity Futures Examination (NCFE or Series 3)

Registration Rule 401 requires each individual who is applying for NFA membership as a futures commission merchant (FCM), retail foreign exchange dealer (RFED), introducing broker (IB), commodity pool operator (CPO), or commodity trading advisor (CTA), or as an associated person (AP) of these entities, to satisfy proficiency requirements. In most cases, an individual seeking NFA membership or registration as an AP is required to pass the National Commodity Futures Examination (NCFE or Series 3) unless:

• ­the individual passed the Series 3 with two years of the date the application is filed;
• the individual is currently registered as a floor broker; or
• the individual passed the Series 3 more than two years preceding the application and since that date has not had a continuous registration gap for more than two years as an AP or FB or FCM, IB, CPO, or CTA that is a Member of NFA.

To sign up for any of the futures industry exams, the applicant must submit an application online by visiting FINRA's website. Normally, NFA will receive evidence directly from FINRA that individuals have passed one of the futures industry exams. In unusual circumstances, NFA may request the individual provide proof that he or she passed an examination.

Based on an individual's registration status and the type of business an individual conducts, he or she may be eligible for one of the following alternatives to the Series 3 examination:

Futures Managed Funds Examination (Series 31)

An individual may use the Series 31 if:

• the individual is registered with FINRA as a General Securities Representative with a FINRA member firm;
• that FINRA member firm is also an NFA Member FCM or IB or an applicant for NFA membership as an FCM or IB and is sponsoring the individual for AP registration; and
• the individual is going to limit futures activities on behalf of that NFA/FINRA sponsor to soliciting funds, securities or property for participation in a commodity pool, soliciting discretionary accounts to be managed by CTAs or supervising persons who perform these same limited activities.

Limited Futures Examination-Regulations (Series 32)

An individual may use the Series 32 if, within the two years prior to filing the application, they have been registered or licensed to solicit customer business in futures in a jurisdiction outside of the United States (currently UK and Canada only). In the UK, an individual would need to be listed on the Financial Services Register as [FCA CF] Client dealing within two years prior to filing the application and also submit one of the following Certificates in Derivatives: Derivatives - Level 3 or Financial Derivatives - Level 3. If an individual has been continuously approved (no gap of more than (2) years in registration) as CF30 (previously CF21 and now [FCA CF] Client dealing) since December 1, 2001, that individual would not be required to submit proof of having obtained a Certificate in Derivatives. In Canada, an individual would need to submit proof of their registration or license to NFA along with documentation relating to the applicant's market knowledge such as completion of the appropriate qualifications testing.  Any questions regarding eligibility should be directed to NFA prior to taking the Series 32. 

Referral of Securities Clients

An individual is not required to take an examination if:

• the individual is registered with FINRA as a General Securities Representative with a FINRA member firm;
• that FINRA member firm is also an NFA Member FCM or IB or an applicant for NFA membership as an FCM or IB and;
• the individual is going to limit futures activity on behalf of that sponsor to referring clients to APs of that sponsor, which referrals are solely incidental to the individual's business as a General Securities Representative of that sponsor, or supervising persons who perform this same limited activity.

Waivers for CPOs and CTAs Trading Primarily in Securities

NFA Registration Rule 402 allows NFA to waive the examination requirements for certain individuals who are associated with CPOs that are required to register solely because they operate commodity pools principally engaged in securities transactions and/or who are associated with CTAs that are required to register solely because their securities advisory services include advice on the use of futures and options for risk management purposes. The individual or firm requesting the waiver must provide a written description of the facts that qualify the individual for a waiver.

APs Whose Activities are Limited to Swaps

Individuals are not required to take a Series examination if their sole activities subject to CFTC regulation are and will continue to be limited to:

• soliciting or accepting on behalf of the sponsor orders for swaps subject to the jurisdiction of the CFTC;
• soliciting on behalf of the sponsor funds, securities or property for participation in a commodity pool that:
  • Exclusively trades swaps subject to the jurisdiction of the CFTC; or
  • Trades swaps subject to the jurisdiction of the CFTC in a commodity pool and the sponsor has been granted or is seeking a waiver from the Series 3 for its APs on the basis that but for the trading of swaps it would be eligible for the exclusion from the definition of CPO under CFTC Regulation 4.5(c)(2)(iii)(A) or (B) or an exemption from registration under CFTC Regulation 4.13(a)(3);
• soliciting on behalf of the sponsor clients to open discretionary accounts that exclusively trade swaps subject to the jurisdiction of the CFTC to be managed by registered CTAs or providing advice on behalf of the sponsor to a commodity pool described above; or
• supervising on behalf of the sponsor of persons whose activities are so limited.

However, these individuals are required to successfully complete NFA's Swaps Proficiency Requirements prior to engaging in swaps business.

APs of CPOs that would be excluded from the definition of CPO under 4.5(c)(2)(iii)(A) or (B) or exempt from registration under 4.13(a)(3) but for their swaps activities (i.e., the CPO would meet the de minimis requirements if swaps were not included) will not be eligible to automatically claim the waiver. Instead, an AP's sponsor must send a signed request to NFA seeking a waiver based on these circumstances for its AP(s) from taking the Series 3 under NFA Registration Rule 401(e)(2)(ii).

An individual may be required to fulfill additional proficiency requirements based on their positions or the types of business conducted.

Swaps Proficiency Requirements

NFA Bylaw 301(l) requires that each individual seeking approval as a swap firm or swap AP must satisfy NFA's Swaps Proficiency Requirements unless:

• NFA has received satisfactory evidence that the applicant has passed NFA's Swaps Proficiency Requirements within two years of the date the application is filed; or
• Since the date that the applicant took and passed NFA's Swaps Proficiency Requirements, there has been no period of two consecutive years during which the applicant has not been approved as a swap associated person of an FCM, IB, CPO or CTA, approved as an NFA Member swap firm or employed by an SD that is a Member of NFA or its affiliated entity.

NFA Compliance Rule 2-24(a) requires SDs that are Members of NFA to ensure every individual seeking to act as an AP as defined by CFTC Regulation 1.3 on behalf of the Member SD has passed NFA's Swaps Proficiency Requirements before engaging in AP activities unless:

• NFA has received satisfactory evidence that the individual has passed the applicable track of NFA's Swaps Proficiency Requirements within the prior two years; or

• Since the date that the individual took and passed the applicable track of NFA's Swaps Proficiency Requirements, there has been no period of two consecutive years during which the individual has not been approved as a swap AP of an FCM, IB, CPO or CTA, approved as an NFA Member swap firm or employed by an SD that is a Member of NFA or its affiliated entity.

Branch Manager Proficiency Requirements

NFA Branch Manager Examination (Series 30)

NFA Compliance Rule 2-7 requires that each individual who is seeking approval as a Branch Office Manager pass the Series 30 (NFA Branch Manager Examination) unless:

• they have passed the Series 30 examination within two years of the date the application is filed;
• they are currently approved as a Branch Office Manager;
• they were approved as a Branch Office Manager and since the last date the applicant was withdrawn as a Branch Office Manager, there has not been a period of two consecutive years during which they were not either temporary licensed as an AP or registered as an AP or FB;
• their sponsor is a registered broker-dealer that provides proof that they are qualified to act as a branch office manager or designated supervisor under the rules of FINRA; or
• their sponsor is an approved swap firm and its sole activities are soliciting and accepting orders for swaps subject to the jurisdiction of the CFTC and they have taken and passed NFA's Swaps Proficiency Requirements.

Forex Proficiency Requirements

Retail Off-Exchange Forex Examination (Series 34)

NFA Bylaw 301(j) requires that each individual seeking approval as a forex firm or forex associated person pass the Series 34 examination before engaging in off-exchange retail forex unless:

• the applicant has satisfied the Series 3 or Series 32 proficiency requirement (as described above) and

• • NFA has received satisfactory evidence that the applicant has passed the Series 34 within two years of the date the application is filed or
  • since the date the applicant last passed the Series 34 there has been no period of two consecutive years during which the applicant has not been either registered as an AP or FB or FCM, RFED, IB, CPO, CTA or LTM that is a Member of NFA; or

• the applicant was registered as an AP, FB or an approved sole proprietor on May 22, 2008, and there has been no period of two consecutive years since that date during which the applicant has not been either registered as an AP or FB, or FCM, RFED, IB, CTA, CPO or LTM that is a Member of NFA.