Jun 30, 2025 On June 12, 2025 National Futures Association (“NFA”) published a notice to members regarding their obligations when onboarding new customer relationships. All NFA members are required to follow NFA Rule 2-30. NFA’s notice supplements the obligations of Rule 2-30 and referenced a notice published by the Intercontinental Exchange (“ICE”) highlighting concerns being observed throughout the industry. If you have not yet reviewed the ICE advisory please be sure to do so. This obligation is most applicable and critical for Futures Commission Merchants (“FCM”) and Introducing Brokers (“IB”). It is relatively unusual to see such a notice published by an exchange. This may indicate that risks are beginning to show up with larger commercial accounts and/or those accounts which are accessing bi-laterally negotiated block futures commercial markets. Exercise Extreme Caution ICE’s market regulation department has become aware of and is observing an uptick in alarming customer behaviors at the time of account opening. ICE has identified suspicious behavior occurring in the following areas and ways: use of falsified documents, such as falsified passports and account/bank statements submission of false information and/or attestations representation of entities and individuals that do not exist trading in a manner that results in large swings in profit or losses to an account immediate or prompt requests for fund withdrawals via wire transfer client not communicating with the FCM/IB when asked questions failures to meet margin calls impersonations of individuals during interviews or live calls FCM and IB Obligations FCMs and IBs have an obligation to reasonably work together when opening and establishing a customer relationship. Both types of firms should have in place and on file client onboarding policies and procedures. Due diligence and care must be taken by all registrants when allowing participants into the derivatives market place. ICE is recommending FCMs and IBs review and reconsider onboarding policies to consider the following: conducting more comprehensive background checks thoroughly verifying all client documentation (e.g., validity of the provided address, passport or license) understanding the client’s reasoning for trading and for what specific markets. (For example, was the new client pitched to open an account or trade an exotic market via a group forum or chat?) questioning and vetting the client’s trading experience, specifically in exotic strategies/options monitoring requests to transfer positions of recently opened account(s) to another FCM; placing lower trading limits on new clients for a trial period or specifically in exotic markets/options; and robust monitoring to detect suspicious activities post-onboarding such as pre-arranged and money pass trading or unusual trading patterns in low-volume or exotic markets. Risk and Anti-Money Laundering Concerns Over the past several years many non-traditional market participants have begun trading derivatives. These participants are coming from around the globe and trying to access United States markets. Further, over the past several years there has been an uptick in derivatives trading innovation globally. Digital currency products, binary options, and event contracts to name a few. The CFTC has approved a number of new Designated Contract Markets (“DCM”) and Derivative Clearing Organizations (“DCO”). Similarly, exchanges have been offering a range of new product types both regulated and unregulated. With increased use of artificial intelligence and seemingly new ways of committing fraud coming to the market place daily registrants must be vigilant. Training of staff and evaluation of policies and procedures will be critical to staying ahead of bad actors. If you’d like to speak with Turnkey today about any of our ongoing education and training products or our compliance manual and policy development services please contact us today.