The Section 4s Review Process
The CFTC's SD and MSP registration rules require, among other things, that in order to become registered, SDs and MSPs must demonstrate compliance with multiple substantive regulatory requirements (known as the Section 4s Implementing Regulations). At the current time, NFA expects the compliance dates for many of the Section 4s Implementing Regulations to be on or after the date that SDs and MSPs are required to apply for registration. The CFTC’s registration rules provide that SD and MSP registration will be provisional until persons demonstrate compliance with all of the Section 4s Implementing Regulations as required.
The provisional registration/Section 4s Implementing Regulation submission process will work as follows:
- If an SD/MSP applies for registration prior to the compliance date of any Section 4s Implementing Regulation, then the SD/MSP will be provisionally registered upon filing a Form 7-R for itself, as well as Forms 8-R and fingerprint cards for each of its principals.
- If an SD/MSP applies for registration after the compliance date of one or more Section 4s Implementing Regulations, then the SD/MSP will be provisionally registered upon filing a Form 7-R for itself, as well as Forms 8-R and fingerprint cards for all of its principals, and documentation demonstrating compliance with the applicable Section 4s Implementing Regulation(s).
- On or before the compliance date for each Section 4s Implementing Regulation(s), provisionally registered SDs and MSPs will have to file documentation demonstrating compliance with any applicable Section 4s Implementing Regulation(s).
- NFA initially will not accept any Section 4s Implementing Regulation submissions unless accompanied by the Form 7-R, Forms 8-R, and fingerprint cards described above that are required to become provisionally registered. NFA will accept the submission for each Section 4s Implementing Regulation beginning on its effective date. SDs and MSPs that have been notified of provisional registration must submit documentation demonstrating compliance with any subsequently applicable requirements by the compliance date of the respective Section 4s Implementing Regulation. See the 4s Submission Due Dates.
- NFA staff will review each Section 4s Implementing Regulation submission to determine if it demonstrates compliance with the applicable Section 4s Implementing Regulation. If the submission does not appear adequate, NFA staff will provide a Feedback Letter with commentary on areas of the SDs or MSPs documentation that are inadequate.
- SDs and MSPs will be required to submit an attestation signed by a firm principal attesting that the firm has updated its policies and procedures to address comments in the Feedback Letter within the time frame specified in the Feedback Letter. After a firm provides an attestation, NFA will issue an Acknowledgement Letter, which will inform the firm that NFA does not have any further inquiry regarding the 4s topic area at that time. See Notice I-16-01.
- If the SD or MSP fails to remedy any deficiencies and the Section 4s Implementing Regulation's compliance date has passed, NFA will formally notify the SD or MSP that its application is deficient, that it must withdraw its application for registration and not engage in any new activity as an SD or MSP, and that it is no longer provisionally registered. CFTC Regulation 3.10(a)(1)(v)(D)(1) outlines the process for an applicant to cure such deficiencies and continue to be provisionally registered.
A recording of the audio conference, "NFA's feedback on 4s submissions," is available on NFA's website.
If you have any questions concerning the registration process, NFA's Information Center is available Monday through Friday from 8:00 a.m. to 5:00 p.m. CST to answer your questions. Call 312-781-1410 or toll-free at 800-621-3570. You may also email inquiries to firstname.lastname@example.org. Questions on the substantive requirements of the Section 4s Implementing Regulations should be directed to the CFTC staff contacts identified in the respective rulemaking.