Notices to Members

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Notice I-21-13

March 24, 2021

Effective date for Interpretive Notice regarding Members' use of third-party service providers

NFA recently adopted an Interpretive Notice entitled NFA Compliance Rules 2-9 and 2-36: Members' Use of Third-Party Service Providers. The Interpretive Notice requires each Member outsourcing regulatory functions to adopt and implement a supervisory framework over its outsourcing function to mitigate outsourcing-related risks. The Interpretive Notice will become effective on September 30, 2021.

To assist Members, NFA's Interpretive Notice identifies the minimum areas that must be addressed in the supervisory framework and provides guidance on the types of activities a Member should undertake in each of the areas. In particular, the supervisory framework must address the following:

  • Initial risk assessment;
  • Onboarding due diligence;
  • Ongoing monitoring;
  • Termination; and
  • Recordkeeping.

Importantly, the Interpretive Notice reminds Members that regardless of the outsourcing arrangements, Members are ultimately responsible for complying with NFA and CFTC requirements.

Members that have an existing supervisory framework over their outsourcing activities are not required to design and implement a new framework. Instead, they should review their current policies and procedures and make any modifications necessary to meet the requirements of the Interpretive Notice.

To help Members better understand these requirements, NFA is developing a supplement to the Self-Examination Questionnaire. Additionally, NFA will cover the Interpretive Notice and this supplement during forthcoming educational programs.

NFA's Advisory Committees supported this Interpretive Notice, which was unanimously approved by the Board.

More information regarding the Interpretive Notice can be found in NFA's February 26, 2021 submission letter to the CFTC. If you have any questions related to the Interpretive Notice please contact Valerie O'Malley, Director, Compliance (vomalley@nfa.futures.org or 312-781-1290) or Regina Robles, Associate Director, OTC Derivatives (rrobles@nfa.futures.org or 212-346-5633).

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