Per Compliance Rule 2-9, NFA Members with Branch Offices and/or Guaranteed Introducing Brokers (GIB) are required to conduct annual onsite inspections of each Branch Office and GIB. However, a new NFA Interpretive Notice now allows flexibility of this requirement based on risk.
NFA recognizes that due to the ongoing COVID-19 pandemic, it may be difficult for Members to conduct such on-site inspections this year. Firms may now conduct these inspections remotely before December 31, 2020. A Member will be permitted to conduct a remote inspection again next year if its risk assessment indicates it is appropriate to do so. (A list of risk assessment factors can be found here: Interpretive Notice 9019)
Moreover, the CFTC Division of Market Oversight has extended its NO Action Relief that was set to expire September 30, 2020 to January 15, 2021. Included in this relief is the no-action relief for failure to comply with certain Commission regulations where compliance became challenging or impossible because of displacement of personnel from their normal business sites due to COVID-19 recommended practices such as social distancing and office closures. Included in that relief is recording of oral communications and Time-Stamps in accordance with Commission regulations 1.35 or 155.3. NFA Members can work from remote locations not listed as offices as long as the Member implements and documents alternative supervisory methods to adequately supervise the APs’ activities and meet its record keeping requirements. More details of the extended relief can be found here: Notice I-20-32.
On the other hand, the Temporary Relief from Fingerprinting Requirement has now expired and will NOT be extended. Therefore, as of October 1, 2020 all applicants for AP registration being listed as a principal of an applicant or registrant must submit the applicant’s or natural person principal’s fingerprints on an applicant fingerprint card, available at facilities offering fingerprinting services.
Additionally, all persons currently relying on DSIO’s no-action letter and NFA relief from the fingerprinting requirements and APs that have been granted a temporary license must submit a fingerprint card to NFA by November 2, 2020.