National Futures Association (NFA) announced that its Board of Directors has approved a reduction in the assessment fees it levies on futures contracts and options on futures contracts traded on behalf of public customers from $.02 to $.01 per side (futures and options on futures contracts). Assuming the proposal is approved by the Commodity Futures Trading Commission, the reduction will become effective on October 1, 2014.
"Our assessment fee revenue is tied to public trading volume," said NFA President Dan Roth. "Public trading volume has increased over the past five years, with double-digit volume growth in the last two years. NFA's budgeted revenue for the next fiscal year is approximately $85 million."
The current rate has been effective since January 1, 2011. The proposed reduction returns the assessment fee to the rate that was in place from 2008 through 2010.
"NFA evaluates its fees routinely to be sure it is assessing what is necessary to fund robust and effective operations without charging NFA Members more than necessary," Roth said.
Even with a decrease of just $.01 per side, the impact on the futures firms that are assessed the fee can be substantial.
"The lower assessment fee will result in savings of approximately $20 million annually for market participants," said NFA's CFO David Hawrysz.
NFA's Board anticipates that the fee reduction may be sustainable for a few years. However, a change in trading volume could either shorten or lengthen the amount of time that this fee can be maintained.
"Throughout NFA's history, our goal has always been to assess only the fees that are necessary to fund our operations while never compromising the quality of our oversight," said Roth.