Broker Proficiency Training
Security futures can be traded in a securities account or a futures account maintained by a securities broker or a futures commission merchant.
The National Futures Association (NFA) and Financial Industry Regulatory Authority (FINRA), in conjunction with the Institute for Financial Markets (IFM) have developed a free, on-line broker proficiency training course for security futures at www.nfa.futures.org.
Completing this training program satisfies the NFA/FINRA requirement for registered securities and futures professionals to offer security futures to their customers.
There are five modules in the on-line course:
- Stocks and Stock Options
- Futures Contracts
- Security Futures Products
- Regulatory Requirements for Security Futures
- Supervision of the Sale and Offer of Security Futures
Registered professionals may not be required to complete all five modules. For example, individuals already registered with FINRA may not be required to complete module 1, Stocks and Stock Options. Please contact the NFA and/or FINRA for definitive information regarding the modules required to complete.
Professionals registered only with the NFA should access the training program through the NFA’s Web site (www.nfa.futures.org), and individuals registered with FINRA or with dual-registration should access the program on FINRA’s Web site (www.finra.org).
The term “Corporate Action” is used to describe certain types of actions taken by a company’s governing board that directly affect the valuation of the company’s stock.
Events classified as Corporate Actions include stock splits, extraordinary dividends, rights offerings, mergers, spin offs, tender offers, and certain other types of transactions. In some cases, derivatives exchanges must make adjustments to contract specifications with regard to Corporate Events to ensure continuity in the markets.
OCC rules govern the application of adjustments for OneChicago single stock futures products:
Bankruptcy of an Underlying Security
Provided the underlying stock continues trading, OneChicago will continue to trade all listed derivatives and the Options Clearing Corporation will continue to clear the derivative and deliver the stock.
Market participants should consult with an attorney regarding the tax implications of trading futures products, including whether Section 1058 of the Internal Revenue Code applies to your trading strategy.