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October 01, 2020
Coronavirus Update—Relief from the On-Site Annual Inspection of Branch Offices and Guaranteed IBs
NFA's Interpretive Notice 9019 — Compliance Rule 2-9: Supervision of Branch Offices and Guaranteed IBs and Interpretive Notice 9053 — Forex Transactions require Members with branch offices and/or guaranteed introducing brokers (IB) to conduct an annual on-site inspection of each branch office and guaranteed IB. The Interpretive Notices provide some flexibility on the on-site requirement by permitting Members to use a risk-based approach to identify branch offices or guaranteed IBs for which the Member determines it would be appropriate to conduct an on-site inspection every other year (with the off year's inspection conducted remotely).
Due to COVID-19, NFA understands that it may be difficult for Members to conduct on-site inspections at branch offices and guaranteed IBs this year. Therefore, although Members must conduct the required annual inspection of each branch office and guaranteed IB by December 31, 2020, firms may conduct these inspections remotely. For the next calendar year, Members that conduct a remote inspection this calendar year based on this relief will not be required to conduct an on-site inspection to comply with the Interpretive Notices' every-other-year restriction on remote inspections. Specifically, a Member will be permitted to conduct a remote inspection again next year if its risk assessment1 (which factors in that the Member did not conduct an on-site inspection this year) indicates that it is appropriate to do so.
If you have any questions on this relief, please contact Valerie O'Malley, Director, Futures Compliance (312-781-1290 or firstname.lastname@example.org).
Timely information and guidance for Members and the investing public related to COVID-19 continues to be posted to NFA's dedicated COVID-19 webpage as it becomes available.
1A list of factors that a Member should consider as part of its risk assessment are included in the Annual Inspection section of Interpretive Notice 9019.