Enhanced Supervisory Requirements FAQs

The requirements are imposed on Members that meet specific criteria based on the disciplinary history of their APs and principals or on their commission levels. Section III of Interpretive Notice 9021 describes these criteria.

A Disciplined Firm is one that has been sanctioned by NFA or the CFTC during the last five years or permanently barred by NFA or the CFTC based on a formal charge of sales practice or promotional material violations or a firm that has been ever been sanctioned for sales practices involving the offer, purchase or sale of security futures products.

Not for that reason alone. However, the firm may be subject to the enhanced supervisory requirements for other reasons, such as the background of its APs and/or principals or the commissions it charges.

Qualified users can find the Disciplined Firm List in the Report Center on NFA's Online Registration System (ORS). Those without access to ORS can check a firm's disciplinary history in BASIC.

If you are a Member, you can check the Disciplined Firm List in ORS. If you are an Associate, you can check the firm's disciplinary history in BASIC. The firm will come off the Disciplined Firm List five years after the penalty date listed in BASIC unless the firm was permanently barred, was sanctioned for sales practices involving security futures, or has a more recent sanction for sales practice and promotional material violations that is less than five years old. 

 

Yes. The broker's Status History screen in ORS indicates if a current or former AP has been employed by a Disciplined Firm.

The firm's ORS Dashboard contains a link to a screen called "Entity Profile Information," which contains this information in a section called "Disciplined Employee Summary."

Yes. Under Interpretive Notice 9021, the APs of an FCM or FDM's GIBs will be treated as APs of the FCM or FDM for determining whether the firm meets the criteria to adopt the enhanced supervisory requirements. The sole exception to this rule would occur if the GIB were added to the five-year Disciplined Firms List after the effective date of its guarantee agreement with the FCM/FDM. In that case, the APs of the GIB would not be counted toward the total number of APs with at least one disciplined firm in their background as long as they have not been registered at any other firms on NFA's Disciplined Firms List. 

Note that if an FCM or FDM enters into a guarantee agreement with an IB that has been charged in an NFA or CFTC enforcement action alleging sales practice or promotional material violations and the charges have not been resolved, the APs of the GIB would count toward the FCM or FDM's total number of APs with at least one disciplined firm in their background if the GIB is subsequently added to the five-year Disciplined Firm's List.

Once a firm meets the enhanced supervisory criteria, it must adopt the requirements unless it files a petition for a waiver with the Telemarketing Procedures Waiver Committee and the Committee grants the firm's waiver request. In addition, changing the firm's personnel composition after it meets the criteria won't affect the firm's qualification status, so the firm cannot avoid it by terminating an employee who was included in the count of APs or principals who were previously employed by a Disciplined Firm. 

Firms may ask for a partial or full waiver from complying with the enhanced supervisory requirements by filing a petition with the three-person Telemarketing Procedures Waiver Committee within 30 days after NFA notifies the firm that it is required to adopt the requirements. If the firm fails to file a timely waiver request, then it may not ask for a full or partial waiver again until at least two years have passed since the firm adopted the enhanced procedures. Similarly, if the Waiver Committee denies the firm's waiver request, the firm may not ask for a waiver again until at least two years have passed since the firm adopted the required enhanced procedures.

Probably, although there are limited exemptions for individuals who worked at a Disciplined Firm a long time ago or for a short period of time. See Section III, A-4 of Interpretive Notice 9021 for a complete description of the exemptions.

Yes. FCMs and FDMs who meet the criteria are required to maintain adjusted net capital of at least the early warning requirement under CFTC rules. IBs who do not operate pursuant to a guarantee agreement must maintain adjusted net capital of at least $250,000. Affected Members can ask the Telemarketing Procedures Waiver Committee for a waiver from complying with the increased capital requirement.

Yes.  Unless a waiver from the enhanced capital requirement is granted, CPOs and CTAs must maintain adjusted net capital of at least $100,000 and are required to demonstrate compliance with this requirement at NFA's request. 

If a firm meets the criteria, it must file all promotional material, as defined in NFA Compliance Rule 2-29(i), with NFA at least 10 days before using the material for the first time. Promotional material must be filed through NFA's Promotional Material Filing System. This requirement also applies to all existing promotional material the firm is using at the time the enhanced supervisory requirements become effective. In addition, if the firm is an FCM that guarantees IBs, this requirement also applies to the promotional material used by the firm's guaranteed IBs.