Jan 30, 2026 Turnkey Trading Partners (“Turnkey”) regularly assists clients through routine National Futures Association (“NFA”) examinations. As part of these reviews, NFA staff almost always ask member firms to produce their NFA Bylaw 1101 procedures. In Turnkey’s experience, many firms do not have these procedures formally documented. In some cases, firms are not even familiar with Bylaw 1101 by name — despite following its requirements in practice based on experience and industry norms. Because of this disconnect, it is critical that all NFA member firms and their Associated Persons (“APs”) understand Bylaw 1101, how it applies to their business, and how to demonstrate compliance. This article is intended to serve as a practical overview and refresher. What Is NFA Bylaw 1101? NFA Bylaw 1101 prohibits NFA members from conducting business with non-members that are required to be registered with the Commodity Futures Trading Commission (“CFTC”) as a Futures Commission Merchant (“FCM”), Introducing Broker (“IB”), Commodity Pool Operator (“CPO”), Commodity Trading Advisor (“CTA”), or Leverage Transaction Merchant (“LTM”). The rule states, in relevant part: “No Member may carry an account, accept an order or handle a transaction in commodity interest contracts for or on behalf of any non-Member of NFA, or suspended Member, that is required to be registered with the Commission as an FCM, IB, CPO, CTA or LTM, and that is acting in respect to the account, order or transaction for a customer, a commodity pool or participant therein, a client of a commodity trading advisor, or any other person.” Each NFA member is required to maintain procedures reasonably designed to ensure compliance with this obligation. Who Must Be Registered With the CFTC and Become NFA Members? NFA maintains extensive guidance on registration requirements on its website. Broadly speaking, CFTC registration and NFA membership are generally required for any person or entity that intends to profit by brokering, trading, or soliciting commodity interest products for U.S. persons, subject to applicable exemptions. One resource Turnkey often references in connection with Bylaw 1101 reviews is the registration determination chart published by NFA. This chart outlines when registration is required based on the location of the entity, its customers, and the exchange on which contracts are traded. Entity Location Customer Location Exchange Location Registration Required United States United States United States Yes United States United States Foreign Country Yes United States Foreign Country United States Yes United States Foreign Country Foreign Country No Foreign Country United States United States Yes Foreign Country United States Foreign Country * Foreign Country Foreign Country United States No** Foreign Country Foreign Country Foreign Country No * Registration may be required depending on the facts and applicable exemptions. ** Certain conditions and exemptions may apply. NFA member firms should also be familiar with the full range of registration categories, including Associated Persons (“AP”), Futures Commission Merchants (“FCM”), Retail Foreign Exchange Dealers (“RFED”), Introducing Brokers (Independent and Guaranteed), Commodity Pool Operators (“CPO”), Commodity Trading Advisors (“CTA”), Floor Brokers (“FB”), and Principals. Policies and Procedures Obligations NFA members must maintain written procedures reasonably designed to ensure compliance with Bylaw 1101. At a minimum, those procedures should address the following areas: Entity account onboarding Members should review NFA BASIC prior to opening any new account for an entity customer, particularly entities that appear financial in nature. Company names containing terms such as fund, asset management, advisors, LP, pool, brokerage, trading, or capital management should be subject to heightened scrutiny. Third-party account controllers and POAs Accounts granting power of attorney to third parties should be reviewed carefully. Third-party account controllers may be required to register as CTAs unless a valid exemption applies. Members should confirm registration status through NFA BASIC or document a reasonable basis for reliance on an exemption. Pooled investment vehicles When opening accounts for pooled vehicles, members must confirm that the pool is properly registered with NFA or that a claimed exemption is valid and reasonable. Members should not blindly rely on exemptions that conflict with information they otherwise know about the customer or the pool’s operations. Compensation and sales activity Bylaw 1101 also applies to individuals receiving compensation from the member firm. All individuals engaged in solicitation or sales activity on behalf of the firm must be properly registered as APs. Members should have procedures to review commission splits and third-party payments to ensure compensation is paid only to properly registered persons or entities. In addition, any branch office must not be a separate legal entity from the member firm. Payments to branch offices should be made directly to registered APs, not to an underlying legal entity. Conclusion NFA Bylaw 1101 is a foundational component of the regulatory framework governing NFA members. Firms should expect NFA examiners to ask how this obligation is addressed and enforced during routine examinations. Having clear, well-documented procedures — and being able to explain how they operate in practice — is critical. The guidance above is intended to help firms evaluate and strengthen their approach to Bylaw 1101 compliance and avoid unnecessary issues during NFA reviews.