NFA CFTC Annual Compliance Obligations

As 2019 comes to a close staff will begin leaving for holiday vacation and compliance will be forgotten.  Turnkey Trading Partners always likes to remind our clients to consider annual compliance deadlines and obligations.  This year saw both the Commodity Futures Trading Commission (“CFTC”) as well as National Futures Association (“NFA”) roll out a number of new compliance and regulatory changes.  They also increased enforcement efforts and have generally been more active with audits than they have in previous years.  Earlier this month Turnkey published an article about enforcement actions, patterns, and trends to look out for in 2020.

CFTC and NFA Enforcement Priorities 2020

For 2019 Turnkey staff noted an increased level of activity by the National Futures Association (“NFA”) with respect to audits conducted of member firms. NFA appeared to be more ambitious this calendar year with commodity trading advisors (“CTAs”), completing more scoped performance audits. The self-regulatory organization also seemed to also be more aggressively focused on Cybersecurity (“ISSP”) compliance.  NFA continued its trend of requiring documentation in writing for virtually all compliance obligations. This approach has been consistent and steady over the last several years.  Turnkey’s institutional clients also saw an increase in requests made directly from the CFTC for market information than in the previous twelve years of our business history.  For 2020 we expect both the CFTC and NFA to continue the trends above.

New NFA Promotional Material Guidelines

When National Futures Association (“NFA”) member firms advertise they open themselves up to a great deal of regulatory risk. Without proper consideration, even the most innocent and well-intended efforts to promote a business can land CFTC registered firms in hot water.  On August 29th, 2019 NFA announced proposed amendments to Compliance Rules 2-29 and 2-36. Within this announcement they also updated and harmonized several well-known Interpretive Notices.  NFA’s proposed changes have now been adopted and will go into effect as of January 1, 2020. All member firms are strongly encouraged to read the entirety of NFAs rule and interpretive notice adjustments. Turnkey would like to focus on a few key adjustments that we believe could significantly impact the industry.