Notices to Members

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Notice I-20-05

February 10, 2020

Educational resources, common deficiencies and other important regulatory information for CPO and CTA Members

NFA is committed to providing its Members with the resources they need to meet their regulatory obligations as efficiently as possible. This Notice covers educational resources, common deficiencies and links to Notices to Members regarding recent amendments to NFA Rules and Interpretive Notices.

Member Regulatory Workshops

NFA will hold Member regulatory workshops in New York on February 25, Chicago on February 27 and London on March 4. During the workshops, CFTC staff, NFA Board members and NFA staff will discuss recent NFA initiatives, cybersecurity developments and information covered in this Notice, among other topics. Click here to register.

Members Section of NFA's Website

From the Members section of NFA's website, Members can access information detailing their regulatory obligations including the following:

Commodity Pool Operators (CPO)

Commodity Trading Advisors (CTA)

Common Deficiencies

The following section describes a number of regulatory obligations related to common deficiencies noted during NFA examinations.

Cybersecurity: CPO and CTA Members must adopt a written information systems security program (ISSP) to address the risk of unauthorized access to or attack of their information technology systems and to respond appropriately should unauthorized attacks occur. Changes to Interpretive Notice 9070, which became effective April 1, 2019, require firms to notify NFA of certain cybersecurity incidents related to their commodity interest business and also clarify that cybersecurity training must be provided to employees upon hiring and annually thereafter.

Supervision: CPO Members must establish an internal control system and maintain written policies and procedures in accordance with NFA Interpretive Notice 9074. Firms should update the policies and procedures for any changes in processes or personnel.

Self-Examination Questionnaire: NFA Members must annually review their operations using NFA's Self-Examination Questionnaire. This questionnaire is designed to aid Members in recognizing potential problem areas and to alert them to procedures that must be revised or strengthened.

Notifications: If a CPO elects a fiscal year end other than the calendar year end for its pools, it must give written notice of the election to all participants and file notice with NFA via EasyFile pursuant to CFTC Regulation 4.22(g) within 90 calendar days after the pool's formation. If this notice is not given, the CPO will be deemed to have elected the calendar year end as the pool's fiscal year end. The CPO must continue to use the elected fiscal year end for the pool unless it provides written notice of any proposed change to all participants and files such notice with the CFTC and NFA via EasyFile at least 90 days before the change.

In the event that a CPO changes the independent CPA engaged to audit the financial statements of the firm's pools, it must file notice with NFA via EasyFile pursuant to CFTC Regulation 1.16(g) no more than 15 days after the CPA's resignation or dismissal by the CPO.

If a CPO is requesting an extension to file an annual pool financial statement, the extension must be filed with NFA via EasyFile prior to the due date of the filing.

Calculation of Financial Ratios: CPO and CTA Members must compute financial ratios using the accrual method of accounting and in accordance with U.S. generally accepted accounting principles or another internationally recognized accounting standard as outlined in Interpretive Notice 9071. Members should consult Notice I-18-20 for additional guidance on calculating these ratios.

Recent Amendments

The following links contain Notices to Members regarding recent amendments to NFA Rules and Interpretive Notices.

I-20-04: Effective date for NFA Rule amendments related to discretionary customer accounts, customer information, risk disclosures and bunched orders

I-19-31: Effective date for amendments to NFA requirements related to CTA performance reporting and disclosures

I-19-30: Effective date for amendments to NFA's Interpretive Notice: NFA Compliance Rule 2-13: Break-Even Analysis

I-19-25: Effective date for amendments to NFA's promotional material Rules and Interpretive Notices

I-19-19: Effective date for updated Interpretive Notice regarding the supervision of branch offices and guaranteed IBs

Contact NFA

If you need assistance with any NFA requirements, please contact NFA's Information Center (312-781-1410 or 800-621-3570 or information@nfa.futures.org).

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