Associated Person

A "person associated with a broker or dealer" or "associated person" is any owner, partner, officer, director, branch manager or employee of a broker or dealer. Clerical and administrative employees are not included.

Basically, it is the name given to participants within the futures market who are sales people or who supervise sales people.

Associated persons are bound by the rules and regulations of different futures exchanges and regulatory bodies. Separate registration with the National Futures Association (NFA) is not required for persons already registered as the following:

• Futures Commission Merchant (FCM)
• Introducing Broker (IB)
• Floor Broker (FB)
• Commodity pool operator CPO or a person associated with one
• Commodity trading advisor CTA or a person associated with one
• Registered Representative with the Financial Industry Regulatory Authority (FINRA)

Financial markets are regulated to make sure that they are fair for all participants, no matter their size, influence or experience. This includes the flow of information, orders and other factors that allow any qualified individual to participate in the markets.

By requiring individuals and firms dealing with client money to register with FINRA and/ or the NFA as associated persons, if they are not already registered in other capacities, participants are subject to rules and regulations to facilitate fair markets. In addition, the regulators have the authority to punish, fine or expel participants if they do not follow these rules and regulations. Registration also sets up methods, including arbitration, to settle disputes among parties.

Therefore, clients have a layer of protection making sure their market access is fair and their funds will only be used for their benefit.

The same protection applies to the information generated by the client's activities. For example, an associated person may not place personal orders ahead of clients' orders. Associated persons also agree to allow the monitoring of their accounts.

Associated persons, including FCMs and IBs, must satisfy minimum standards for:

• Minimum net capital
• Customer funds (FCMs only; IBs do not hold customer funds)
• Disclosure and other requirements for customers
• Financial and other filings

This protects the client from market risk in trade execution as well as risk that the firm goes out of business, possibly taking client funds with it. It also prevents conflicts of interest, although associated persons (and firms) are not necessarily fiduciaries. While they must exercise ethical business practices, they do not have to meet the higher fiduciary standards that investment advisors must meet.