Mar 31, 2025 Turnkey Trading Partners (“TTP”) recently participated in a brokerage conference hosted by a leading industry Futures Commission Merchant (“FCM”) in Las Vegas. At the conference compliance leaders from across the industry met to discuss regulatory matters. Arguably the most important session of the weekend was a panel discussion that Turnkey’s founder and CEO participated in. This panel included NFA’s sitting Director of Audit Management and Education. The focus of the panel was on a forthcoming NFA Interpretive Notice which NFA is referring to as: Interpretive Notice 9083 – Compliance Rules 2-9(a) and (d), 2-36(e) and 2-51(d): Member Supervisory Obligations For Associated Persons. According to NFA, Interpretive Notice 9083 is nearly finalized and is thus unlikely to change much if at all from its current draft format. Turnkey has reviewed the final draft of this notice and considered its potential implications. The following article was written based on a transcript of the Las Vegas event. We have also taken into consideration the draft of the notice in compiling this article. While we stand by our opinions as presented, please be advised: Interpretive Notice 9083 has not yet been published or made public as of the date of this article. It is possible minor changes could be made to the notice before final publication. NFA Guidance Aims for Clarity, Not Revolution The panel discussion surrounding Interpretive Notice 9083 emphasized the importance of firms—particularly Introducing Brokers (IBs)—proactively assessing and strengthening their supervisory framework. Most notably, that most firms will need to revisit policies and procedures in areas such as hiring, training, communication monitoring, and record-keeping. While the interpretive notice does not necessarily set new expectations for supervision, NFA does intend to be more stringent about process and record keeping in this area than they have been in years past. During the panel, the NFA provided context on the new interpretive notice. They confirmed a concept that Turnkey has been discussing for several years. After Covid-19 registrants began allowing people to work from home for the first time. These decisions have made communications and overall broker supervision much more complicated. NFA sought feedback through examinations and asked for industry input prior to drafting the notice. As of today, industry groups, including NFA’s board have approved of the language included within the draft notice. The notice itself awaits review and approval by the Commodity Futures Trading Commission (CFTC) and then should be published. Although the notice is expected to be published shortly, NFA anticipates and industry participants pushed for, an effective compliance date which will likely be approximately six months after CFTC approval and notice publication. This should give firms ample time to update and adopt new policies and procedures as necessary. Although firms will have this time to adapt—whether six months or a year from now—this is not a reason to delay. There is no question that action must be taken immediately. “This isn’t necessarily introducing entirely new concepts,” NFA explained, “but rather formalizing and providing more specific guidance on existing expectations. We’ve been examining these areas for years.” They stressed that the notice allows for flexibility, acknowledging that “operations are different [across different membership categories and business sizes]” and firms must tailor their programs accordingly. This is, of course, a double-edged sword particularly for a contingent of industry participants who have classically relied upon copied-and-pasted documents for policy implementation. These documents will fail to accurately reflect their firm’s specific practices, particularly in terms of supervision and review. NFA stressed that key requirements will include having policies and procedures in writing and conducting annual reviews in a manner consistent with firm operations to ensure policy effectiveness and compliance. Focus Areas: Communications, Hiring, and Training The interpretive notice will specifically address several core supervisory areas: Hiring Practices: Ensuring due diligence in hiring APs and verifying that supervisory personnel are qualified. This must be performed PRIOR to hiring. Communications: Monitoring pre-trade communications, internal communications between brokers, and maintaining robust records of all electronic communications (email, text, chat) related to trading activity. This was highlighted as a major focus area. NFA will expect internal communications, not just those with customers, to be potentially in scope for how supervision is monitored and documented. Order Handling & Trading Activity: Oversight of how orders are processed and general trading practices. Training: Implementing and documenting adequate training programs for APs. Practical Implications for Brokers James Bibbings, CEO of Turnkey Trading Partners, shared a number of his perspectives from working with customers throughout NFA examinations regularly. Bibbings emphasized a needed “attitude change” for some within the industry, particularly smaller firms. Bibbings stated at the event “This is not your grandfather’s NFA anymore,” warning against holding on to traditional ways the industry has operated in the past. He suggested firms leverage technology, which has become increasingly affordable, to manage the increasing burden of monitoring diverse communication channels (such as those potentially involved in block trades). Bibbings stated that in today’s word everything is electronic. It therefore increasingly difficult to manually review such large amounts of data or to use systems which are not recorded to the same location. Turnkey has written on how this process should be managed many times in the past. To read more about Critical CFTC Supervision and Record Keeping Tips click here. Bibbings also highlighted that while the notice clarifies NFA’s expected standards, successful implementation requires firms to conduct thorough risk assessments of their own operations. He stressed the importance of clearly defining record-keeping protocols – what records are kept, where, and for how long – and ensuring robust training and documentation, including disciplinary procedures if policies are breached. Bibbings stressed that there seems to be less tolerance for repeat offenders today than there has been in years past. It is no longer enough for brokers and traders to make mistakes and then continue to disregard warnings or policies. NFA will take exception to this; Turnkey anticipates citing Interpretive Notice 9083 to do so. Turnkey Trading Partners: Consistent Advocacy for Robust Supervision These emerging NFA expectations resonate strongly with guidance Turnkey Trading Partners has provided to the industry for years. The panel stressed that the current regulatory landscape demands more than just superficial compliance. Turnkey has consistently advocated for a proactive and tailored approach to supervision, publishing numerous articles detailing the importance of these very topics. Insights shared previously by Turnkey include detailed examinations of NFA Compliance Rule 2-9 and its practical application, strategies for effectively monitoring electronic communications in a hybrid work environment, guidance on building robust, customized compliance policies and procedures, and best practices for supervising remote APs to meet NFA standards. The points raised by the panel confirm the critical need for firms to address these areas diligently, reinforcing the preparatory advice Turnkey continues to offer its clients and the broader futures community. Remote Work and Record-Keeping Challenges The panel also touched upon the supervision of remote employees. While the rules themselves do not explicitly differ based on location, some of the speakers acknowledged the practical challenges. “The requirements are still the same,” they said, implying firms need effective systems regardless of where APs operate. A recurring theme was the critical importance of record retention and collection, particularly concerning communications that lead to trade execution, aligning with requirements like those found in CFTC Regulation 1.35. Regulation 1.35 and existing NFA interpretive notices on supervision and communications are a complex area. The challenge lies in capturing interactions across various platforms – phone calls (if required), emails, instant messages, and potentially texts if permitted by firm policy. Further complicating the matter is broker non-compliance and customer non-compliance with company policy. How does your firm supervise off channel communications and monitor for their use? Panelists implied that NFA audits will specifically target trade reconstructions and rigorously test whether firms can produce all relevant communications for specific trades. In a sense, NFA’s new interpretive notice will demand, without specifically saying it, that all communications be captured, both written and oral, if brokers will be working remotely. This will put registrants in a difficult position. Will they require staff to return to an office where they can be supervised or will they record all communications to supervise them remotely? A standoff in this area is looming and decisions about this topic should be considered now. Proactive Adaptation Recommended Ahead of Official Notice Release The clear consensus from the panel was the need for proactive preparation. Brokers are advised not to wait for the final text and effective date before evaluating their current practices. Once the NFA interpretive notice is officially released by the CFTC, Turnkey Trading Partners will provide more detailed commentary on specific expectations and nuances. However, TTP has enough confidence in the form and substance discussed that the firm is already making necessary updates to customer policy and procedural documentation. This proactive stance is further supported by observations that the NFA has already been using the core tenets of this draft interpretive notice to guide its audit teams during regulatory examinations for at least the last six months. Therefore, Turnkey Trading Partners strongly recommends that firms make appropriate changes to their company policy documentation now to satisfy NFA examiners going forward, regardless of the notice’s official publication status. How Turnkey Trading Partners Can Assist with Supervisory Duties Navigating the intricacies of NFA supervision requires diligence and expertise, areas where Turnkey Trading Partners provides critical support. TTP offers tailored solutions to help firms meet their supervisory obligations effectively. This includes conducting detailed reviews of trading activity, internal communications, and promotional materials to identify potential compliance gaps, drawing on methods discussed in their insights on performing effective internal compliance reviews. TTP also assists firms in developing and implementing practical supervisory frameworks for their APs, whether in-office or remote. Furthermore, Turnkey excels at drafting comprehensive, customized policies and procedures that reflect a firm’s specific operations while satisfying regulatory requirements. Turnkey can further assist with how firms conduct due diligence before hiring brokers, traders, or adding outside office locations. This extends to creating the necessary annual attestations and establishing clear, documented processes for supervisory reviews – vital components for demonstrating compliance during an NFA audit. This is also a topic TTP has covered extensively in resources focused on preparing for and managing NFA examinations. By partnering with TTP, firms can ensure they have the robust systems and documentation needed to confidently meet NFA expectations.