Compliance Rules

Part 2 - Rules Governing the Business Conduct of Members Registered with the Commission

RULE 2-9. SUPERVISION.

[Effective date of amendments: October 29, 1991; January 19, 1993; March 15, 1994; April 23, 2002; November 1, 2007; July 30, 2018 and September 30, 2019.]

(a) Each FCM, IB, CPO or CTA Member shall diligently supervise its employees and agents in the conduct of their commodity interest activities for or on behalf of the Member. Each Associate of an FCM, IB, CPO or CTA Member who has supervisory duties shall diligently exercise such duties in the conduct of that Associate's commodity interest activities on behalf of the Member.

(b) NFA's Board of Directors may require FCM, IB, CPO and CTA Members that meet specific criteria established by the Board relating to the employment history of its APs or principals or to the total commissions, fees and other charges paid by their customers to adopt enhanced supervisory requirements specified by the Board. This requirement may, in NFA's discretion, be waived upon a showing by the FCM, IB, CPO or CTA Member that the Member's current supervisory procedures provide effective supervision over its employees and agents. Any FCM, IB, CPO or CTA Member seeking such a waiver may submit a written request to a three-member panel consisting of three members of the Business Conduct Committee and/or the Hearing Committee, said members to be appointed by the Board from time to time. Within 30 days after an FCM, IB, CPO or CTA Member submits a waiver request, the Compliance Department will submit a written response to the panel. The decision of the panel shall be final and shall be based upon the written submissions of the Member and of the Compliance Department.

(c) Each FCM and IB Member shall develop and implement a written anti-money laundering program approved in writing by senior management reasonably designed to achieve and monitor the Member's compliance with the applicable requirements of the Bank Secrecy Act (31 U.S.C. 5311, et. seq.), and the implementing regulations promulgated thereunder by the Department of the Treasury and, as applicable, the Commodity Futures Trading Commission. That anti-money laundering program shall, at a minimum,

(1) Establish and implement policies, procedures, and internal controls reasonably designed to prevent the financial institution from being used for money laundering or the financing of terrorist activities and to achieve compliance with the applicable provisions of the Bank Secrecy Act and the implementing regulations thereunder;

(2) Provide for independent testing for compliance to be conducted by Member personnel or by a qualified outside party;

(3) Designate an individual or individuals responsible for implementing and monitoring the day-to-day operations and internal controls of the program;

(4) Provide ongoing training for appropriate personnel; and

(5) Include appropriate risk-based procedures for conducting ongoing customer due diligence, including, but not be limited to:

i) understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and

ii) conducting ongoing monitoring to identify and report suspicious transactions, and, on a risk basis, to maintain and update customer information, including the information regarding the beneficial owners of legal entity customers.

(d) Each Swap Dealer or Major Swap Participant Member shall diligently supervise its employees and agents in the conduct of their swap activities for or on behalf of the Member.