Aug 27, 2025 As one of the United States leading Commodity Futures Trading Commission (“CFTC”) and National Futures Association (“NFA”) centric consulting firms, Turnkey Trading Partners (“Turnkey”) has a front row seat with respect to how industry regulators are evolving their practices. At any given time, Turnkey is supporting 10 to 15 active routine NFA or Chicago Mercantile Exchange Group (“CME”) examinations. In the past, Turnkey has discussed the broader regulatory conversation surrounding artificial intelligence. This highlighted how the CFTC and NFA are framing expectations in this area. Now, Turnkey’s focus is on how AI tools are already being used during regulatory audits. CFTC and NFA Audit History For decades, exams followed a predictable model. Examiners confirmed policies generally aligned with industry rules and regulations. Auditors would be willing to take an oral or written representation from industry registrants and move on. Over time, as technology has advanced, examiners began to increasingly require what they refer to as “documentary evidence” for compliance matters. Today, examiners are cross-referencing compliance manuals, verbal responses, internal business communications, trade data, and other supervisory records. How are they doing this? Did industry audit staff suddenly become more proficient at finding policy and record keeping short comings? While industry rulebooks have always evolved, a significant change is emerging with respect to the tools regulators are using during routine regulatory audits. Although Turnkey cannot confirm exactly how AI has been implemented, the questions and findings noted by regulators is proof enough AI is being implemented. The precision of examiners questions and their overall ability to evaluate disparate pieces of information has evolved tremendously in the past year to eighteen months. For example, if written policies don’t match actual practices this inconsistency quickly becomes a focal point. It is undeniable examiners have AI tools at their disposal to assist in sifting through the massive amounts of communication data provided during exams. Financial Watchdogs Have Been Signaling the Shift On August 1, 2025, the Securities Exchange Commission (“SEC”) announced an Artificial Intelligence Task Force, led by new Chief AI Officer Valerie Szczepanik. The task force’s objective is to find ways to integrate AI across the agency. Chairman Paul Atkins also explained that AI will expand staff capacity to identify issues across massive datasets. While the CFTC and NFA haven’t been as public, firms undergoing exams are seeing the same signs: more granular questions, cross-checking of responses, and pattern recognition that points to similar tools at work in the futures industry. Turnkey has been saying for years that work from home rules and remote examinations were a Trojan horse to move the derivatives industry toward digital record keeping and surveillance. Similarly, recent attempts (Interpretive Notice 9083) to redefine how communications must be retained and supervised were also indicators that AI based auditing was coming. For those to whom it is not glaringly obvious, digital records kept in a “systematic format” as CFTC Regulation 1.35 requires, allows for pristine datasets ripe for AI consideration. Actual Examples of AI In Action Over the past 18 months NFA has become increasingly authoritative about the format of record keeping files provided to them. Specifically, when firm internal and customer communications are requested, we have observed NFA demand specific file types. This suggests file format allows regulators to more readily ingest data into AI based systems. Turnkey has also observed examiners making much larger requests for data and increasing scope periods. Historically where a week of communications might have been requested, now a month or more may be the ask. Once this information is provided, Turnkey has then observed examiners very quickly asking a wide range of questions relative to historical norms. What once would take weeks to review is being turned around in some cases in a matter of days. To cite a few examples, examiners at exchanges and at NFA appear capable of considering entire trade blotters against related brokerage communications. In some instances tens if not hundreds of thousands of pieces of data are being considered. This type of work would have been cumbersome and at times impossible in the past, it now seems routine for examiners. The same is true with regard to communications. Turnkey is observing what appear to be obvious key word lexicon filtering approaches. In one case, all trade records with profanity were flagged among thousands of entries—an outcome suggesting at least some level of automation. Auditor Competency and The Power of AI Tools There is no doubt that AI will (and in our view already is) enabling regulators to do more with less. It is permitting examiners to analyze complete datasets rather than small samples. Trade blotters, years of communications, voice transcripts, and supervisory logs can all be ingested and scanned for anomalies in no time. Natural language processing can flag key phrases or tone changes in communications. Machine learning can detect outlier trading patterns or gaps in supervision. Examiners never previously had the horse power to consider things of this nature apart from finding the occasional needle in the proverbial haystack. In some respects, this is a good thing. Technology should move us all forward and improved regulatory quality is a welcome thing to keep bad actors from being bad actors. On the other hand, Turnkey is also observing a disturbing trend with potential long-term consequences. Examiner competency appears to be eroding quickly. During exams in which obvious AI filtering was used, examiners often have little context as to why the flag occurred. A gap of knowledge and training or underlying support about the flag then leads to errant questions to work through these concerns. When this occurs, many needless hours are spent discussing immaterial inconsistencies where no customers were damaged, markets were not disrupted, and ultimately very minor if any regulatory infractions actually occurred. There must be a happy medium between risk-based auditing and “everything” based auditing. What This Means for Brokers, CTAs, and FCMs For Futures Commission Merchants (“FCM”), Introducing Brokers (“IB”), Commodity Pool Operator (“CPO”) , and Commodity Trading Advisors (“CTA”), the implications are significant. Boilerplate manuals are no longer enough. Regulators now compare what policies say to what records and communications show. A generic claim of “robust surveillance” won’t hold if data suggests otherwise. Similarly, generic words or phrases such as “regularly review” with no specificity of what “regular” means will be called out. The expectation is consistency across policies, procedures, trade data, emails, chats, and even tone or language in communications. Variations are starting to create flags for examiners which increase audit duration and waste time. Supervision, trade reconstructions, and escalation protocols are under tighter scrutiny than ever before. As noted above, examiners are now flagging excessive profanity in communications—an outcome that almost certainly involved technology scanning for tone and language even though no apparent rule violation may have occurred. Policy and Operational Consistency The path forward is alignment. Policies should guide procedures, and procedures must reflect actual practice. Turnkey helps our customers to close this gap through mock audits and adjustments of compliance manuals to meet industry best practice expectations. Our team is well versed in industry audit protocol. Turnkey is familiar with operational best practices and can operate as a business consulting partner as well as a compliance resource. By stress-testing documentation the way regulators do—cross-checking and drilling into details—it is possible to prepare for the use of AI scrutiny during your next exam. If you are preparing for an NFA exam or want to ensure your documentation matches your operations, Turnkey Trading Partners can help. Contact us today to schedule a mock audit or policy review and face regulators with confidence.