NFA proposed amendments to the " NFA Interpretive Notice Compliance Rule 2-9: Supervision of Branch Offices and Guaranteed IBs" (the "Notice"). The NFA Board of Directors approved the proposal on May 16, 2019.
The updates account for developments in electronic trading, electronic communications and other technologies. The revised Notice would give members more flexibility with respect to annual on-site inspections of futures commission merchants, CTA and CPO branch offices and guaranteed introducing brokers ("IBs").
Among other revisions, the new Notice addresses:
- due diligence reviews that member firms should complete when evaluating whether to establish and how to supervise a branch office or guaranteed IB relationship;
- minimum requirements for written supervisory policies and procedures for branch offices and guaranteed IBs; and
- policies and procedures that outline when member firms should escalate compliance issues to NFA or another regulator.
NFA invoked the "ten-day" provision of the CEA, and the proposed changes will go into effect unless the CFTC notifies NFA otherwise. NFA plans to issue a Notice to Members establishing the effective date for the proposal.
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