Sep 25, 2021 By: Turnkey Trading Partners Turnkey has been writing about and reminding its customers about NFA’s new Third-Party Service Provider (“TPSP”) policies and procedures requirement. If you have not already done so, please review this article from April of 2021. Unlike many regulatory adjustments this obligation is fairly substantive and is not something that should be taken lightly. Firms that have not yet considered this mandatory obligation would be advised to do so immediately. The obligations required by NFA go into effect today, September 30, 2021. Beginning tomorrow NFA members without policies and procedures in this area will be deemed to not be in compliance. In fact, Turnkey has already seen NFA begin testing in this area during several of their most recent examinations of our customers. Turnkey has been working with many of its customers to update their existing policies and procedures manual. The new TPSP obligation includes many new and relatively complex obligations of firms with regard to how they outsource to certain third-party vendors. While many companies may have had in place a due diligence process for certain technology vendors as part of their information security systems program (“ISSP”) this new TPSP program is quite different and may be much more involved. As an example the TPSP obligation requires that firms have in place an official: Initial outsourcing assessment A vendor assessment and on-boarding due diligence An ongoing monitoring protocol and; A vendor “off-boarding” or termination process Each of the above aforementioned obligations have nuanced subtleties which NFA describes within Interpretive notice 9079. Please do not take this new TPSP obligation lightly as it has taken Turnkey staff many hours and conversations to properly evaluate it. This policy is required of all member firms commodity trading advisors (CTA), commodity pool operators (CPO), introducing brokers (IB), and futures commission merchants (FCM). To learn more about your TPSP obligations please contact Turnkey today. Turnkey staff can assist your firm in adhering to these new obligations while ensuring appropriate policies and procedures have been established. For more information on our Compliance Consulting solutions, please click here. Not a subscriber to our newsletter? You’re missing out! Sign up and request to receive more information here.