Due to Turnkey Trading Partners (“Turnkey”) market position, we have learned that later this year, the National Futures Association (NFA) intends to replace its current fingerprinting process. Historically, NFA has required applicants to get printed at a local police precinct or to leverage the services of a private fingerprinting vendor. Applicants would then be required to mail completed fingerprint cards to NFA. Going forward, it appears NFA has selected a third party vendor to outsource and standardize this process.  Communications received by Turnkey indicate that NFA has selected Fieldprint to handle a majority of the load in this area.

Pros and Cons

The traditional fingerprinting process has long been a nightmare for applicants. The move to a standardized process with Fieldprint, or any other similar vendor, will certainly help. On the other hand, the early rollout information provided to Turnkey suggests this process will also introduce new burdens for registrants. As of the date of this article, going forward applications will require multiple layers of security questions.  Appointments will also be required to be scheduled through a single vendor. Additionally there will be a standard $50 fee which may be higher under certain circumstances.

At first glance, this appears to be a potential nightmare for rural and international applicants. Access to printing sites with no alternative process could become problematic. Presently, there appears to be no function to accommodate those who are unable to make it to an authorized Fieldprint location. It is also unclear whether the NFA gathered any member input before deciding on this change?  Prior to the Covid-19 Pandemic electronic fingerprinting was allowed at NFA offices in New York in Chicago. This process ended and eventually was disallowed altogether. It seems that it will once again be permitted but only through one exclusive provider.

Process Issues

The commodity interest industry is diverse. It consists of small “one man” operations, and multi-national conglomerates. As noted above, registrants work from incredibly remote rural locations as well as some of the world’s primary financial hubs. This change, although admittedly in a BETA format, leaves many questions for firms. It is not clear if the application process will now be handled at the company level or entirely by the individual registrant? Turnkey’s early experience with clients suggests several relatively time-consuming steps are required by the applicant personally. This too could be highly problematic for larger organizations who centralize registrant application processes. Ultimately, this shift represents a major departure from the current process that had allowed anyone to use their local police precinct—often for free—and mail the card directly to NFA.

Turnkey Trading Partners (Turnkey) will continue to monitor NFA’s transition of its fingerprinting process. It appears this process will be completed later this year at which point more public details should be made available.  In the meantime, firms should be aware that registration timelines could lengthen, access issues may arise, and costs could increase once this system is fully in place. Those with concerns should contact NFA and voice their views about this approach.  Providing feedback directly to NFA at its upcoming seminars and rulemaking sessions may be a good idea. Unfortunately, regulators do not seek the opinion or take the temperature of an entire industry, the speak only with those internally and on their representative boards. These groups typically do not represent such a broad and diverse industry well. Talking to NFA representatives early may help to improve the current registration process while avoiding new frustration points going forward.