As your industry advocate, the NIBA provides many services which help your business stay in compliance with NFA regulations. "Ask the NFA," is the way you can ask questions about those regulations and compliance requirements without having to call NFA directly.
Just email us at nfacomments@theniba.com and we will get the answers for you. Please keep in mind the purpose of this contact is to keep the lines of communication between NFA and NIBA members open, not to fix any specific individual concerns.
This month's questions were selected from those submitted by NIBA members. The answers were supplied by NFA staff.
"If I restructure my corporation i.e. change from LLC to S-Corp, does that require re-registration with NFA or is there a simple process to update company info on website?"
Newly created companies, sole proprietors becoming corporations, or corporations becoming sole proprietors need to register. If you restructure an existing company, you should update your company's information using NFA's Online Registration System. This is a general response to a general question. It is recommended that Members contemplating restructuring obtain legal advice and contact NFA's Information Center regarding their specific circumstances.
"Is annual training a requirement of the new cybersecurity rules?"
The need to train employees, and the extent of such training, depends on the risks identified by the Member during its own risk assessment. Everyone employed by the Member must understand their responsibility for safeguarding personally identifiable information and the security of the Member’s systems. Of course, it may be appropriate to vary the level of training based on an employee’s access to particular systems and information.
Members should maintain records relating to employee training, including the topics covered (e.g. an agenda, presentation slides, etc.), a record of attendance (e.g. a sign-in sheet or learning management system log), and any other materials distributed as part of the training.
"If I work out of my home office some of the time and out of my office most of the time are there any compliance issues with that?"
Unless working very occasionally at home, you may need to be a branch office. According to NFA Interpretive Notice 9002, any location other than the main business address at which an FCM, RFED, IB, CPO or CTA employs persons engaged in activities requiring registration as an AP is a branch office. This is true even if there is only one person at the location. If the firm has one or more branch offices, NFA's registration records on the firm must include the names of all persons who are branch office managers, in addition to the address for each branch office.
Putting aside the question of branch offices, regarding compliance, each NFA Member must diligently supervise its associated persons (AP) in the conduct of their commodity futures activities whether these activities take place at the firm's main office, a branch office, or on occasion at some other location such as an AP's home. NFA Interpretive Notice 9019 outlines Members' continuing responsibility to supervise their employees and agents working in listed branch office locations. These same day-to-day supervisory concepts—such as monitoring of account activity, customer information, communications and customer complaints—should be applied when an AP works from any remote location.
NFA Members must also comply with all recordkeeping requirements. This includes maintaining records relating to any orders accepted while working from home and tape recordings of oral communications for IBs that must record conversations pursuant to CFTC Regulation 1.35.