Notices to Members

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Notice I-20-07

February 10, 2020

Educational resources, common deficiencies and other important regulatory information for FCM, FDM and IB 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:

Futures Commission Merchants (FCM)

Forex Dealer Members (FDM)

Introducing Brokers (IB)

Common Deficiencies

The following section describes a number of regulatory obligations related to common deficiencies noted during NFA examinations of Member FCMs for which NFA is the DSRO, FDMs and IBs.

Supervision: Pursuant to NFA Compliance Rules 2-9, and FDMs, pursuant to Compliance Rule 2-36, FCM, FDM and IB Members are required to diligently supervise their employees and agents in the conduct of their commodity interest activities. Such supervision includes, when required 1, maintaining a record of all oral and written communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading and prices that lead to the execution of a transaction in a commodity interest and related cash or forward transaction, whether communicated by telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, mobile device or other digital or electronic media. Firms should consider how their supervisory policies and procedures address the manner, frequency and results of monitoring written and oral communications.

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 need to be revised or strengthened.

Cybersecurity: FCM, FDM and IB 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 at least annually thereafter.

Anti-Money Laundering: FCM and IB Members must ensure that their anti-money laundering programs include procedures for conducting ongoing customer due diligence and verifying beneficial owners for legal entity customers as outlined in Interpretive Notice 9045. Firms that rely on other financial institutions to identify and verify beneficial owners for legal entity customers must establish or update existing contracts to incorporate the requirements that will be performed by the other financial institution.

Notifications (FCMs only): Under certain circumstances, an FCM must transmit a notice filing to NFA via WinJammerTM. For example, an FCM must notify NFA within 24 hours if it becomes the subject of a formal investigation by the SEC, a securities SRO or a futures SRO. An FCM must provide NFA a copy of any examination report issued to the FCM by the SEC or a securities SRO. An FCM must also provide notice of any correspondence received from the SEC or a securities SRO that raises issues with the adequacy of its capital position, liquidity to meet its obligations or ability to operate its business or internal controls.

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-19-25: 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).


1 An IB that has generated over the preceding three years more than $5 million in aggregate gross revenues from its activities as an IB is required to maintain certain oral and written communications.

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