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March 26, 2019
Reminder: April 1 effective date for NFA's Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System
In January 2019, NFA issued a Notice to Members announcing the adoption of an Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System (Interpretive Notice). The Interpretive Notice requires commodity pool operator (CPO) Members, which have the ability to control customer funds, to implement an internal controls framework designed to:
- Protect customer funds; and
- Provide reasonable assurance that the books and records of a CPO's commodity pools are accurate and reliable and that the CPO is in compliance with all CFTC and NFA requirements.
The Interpretive Notice will become effective on April 1, 2019.
The Interpretive Notice adopts a principles-based approach to allow these firms some degree of flexibility in determining how to implement an internal controls framework, given differences in the size of each firm and the complexity of their operations. However, the Interpretive Notice does require each CPO Member to adopt and enforce an internal controls framework appropriate to its circumstances.
NFA added an appendix to its Self-Examination Questionnaire on CPO Internal Controls to its website. This appendix is designed to help Members develop, implement and maintain an internal controls framework.
In order to ensure Members understand their obligations with regard to this Interpretive Notice, NFA will hold a webinar on Thursday, April 11, 2019 at 11:00 a.m. CT/12:00 p.m. ET. There is no charge to attend the webinar; however, registration is required. Register for the webinar. An archived version of the webinar and a transcript will be available on NFA's website in late April. The Interpretive Notice was also discussed at NFA's February Member workshops. Workshop materials are available on NFA's website. The Interpretive Notice was discussed at NFA's February Member workshops. Workshop materials are available on NFA's website.
More information on the Interpretive Notice is available in the December 10, 2018 submission letter to the CFTC. If you have any questions regarding these amendments, please contact Patricia Cushing, Director, Compliance (firstname.lastname@example.org or 312-781-1403) or Ryan Ahlfeld, Manager II, Examinations, Compliance (email@example.com or 312-781-1591).