Mar 24, 2021 NFA recently adopted an Interpretive Notice entitled NFA Compliance Rules 2-9 and 2-36: Members’ Use of Third-Party Service Providers. The Interpretive Notice requires each Member outsourcing regulatory functions to adopt and implement a supervisory framework over its outsourcing function to mitigate outsourcing-related risks. Turnkey staff has been aware this Interpretive Notice was coming for some time. Next month’s feature article will be about the contents of the interp, Turnkey’s recommendations, and how firms should respond to this compliance change. Please be sure to sign up for our newsletter if you have not already done so for the latest updates on this topic. Compliance changes will become effective on September 30, 2021 so there is still time to adjust current operations. To assist Members, NFA’s Interpretive Notice identifies the minimum areas that must be addressed in the supervisory framework and provides guidance on the types of activities a Member should undertake in each of the areas. In particular, the supervisory framework must address the following: Initial risk assessment; Onboarding due diligence; Ongoing monitoring; Termination; and Recordkeeping. Importantly, the Interpretive Notice reminds Members that regardless of the outsourcing arrangements, Members are ultimately responsible for complying with NFA and CFTC requirements. Members that have an existing supervisory framework over their outsourcing activities are not required to design and implement a new framework. Instead, they should review their current policies and procedures and make any modifications necessary to meet the requirements of the Interpretive Notice. To help Members better understand these requirements, NFA is developing a supplement to the Self-Examination Questionnaire. Additionally, NFA will cover the Interpretive Notice and this supplement during forthcoming educational programs. If you have any questions or concerns in complying with these new regulatory obligations, please contact Turnkey today via (312) 324-0040 or by clicking here.