Effective Date: January 31, 2020
NFA has recently amended NFA Bylaw 301 and NFA Compliance Rule 2-24 as well as adopted a new Interpretive Notice entitled NFA Bylaw 301 and Compliance Rule 2-24: Proficiency Requirements for Swap APs to implement NFA’s Swaps Proficiency Requirements.
FCMs, IBs, CPOs and CTA Applicability
Currently, the NFA Bylaw and Rule requires Futures Commission Merchants, Introducing Brokers, Commodity Pool Operators, and Commodity Trading Advisors engaged in CFTC regulated swaps activities and registered associated persons of those Members whose activities involve CFTC regulated swaps, to be approved by NFA as a swap firm or swap AP. The amended bylaw specifies that any individual seeking approval as an FCM, IB, CPO or CTA Member swap firm or as a swap AP of an FCM, IB, CPO, or CTA Member MUST take and pass NFA’s Swaps Proficiency Requirements.
Swap Dealers Applicability
Individuals acting as APs at NFA member swap dealers are not NFA associate Members subject to NFA’s jurisdiction. Therefore, NFA is not imposing these requirements directly on individuals acting as APs at SDs. However, the amended compliance rule will prohibit an SD Member from having any person associated with it that has not satisfied NFA’s Swaps Proficiency Requirements.
Non-US APs Applicability
The notice excludes certain individuals acting as APs at SDs located outside the U.S. including non-U.S. branch offices of U.S. SDs, from the NFAs swaps Proficiency Requirements.
The new requirements become effective January 31, 2020. However, individuals who are approved as swap APs at an FCM, IB, CPO, or CTA Member firm or acting as an AP at an SD on January 31, 2021 must have satisfied NFAs Swaps proficiency Requirements to remain approved as a swap AP or working as an AP at an SD after this date.
Since NFA will allow individuals to satisfy the requirement starting January of 2020, currently registered APs and individuals acting as APs at SDs will have an entire year to satisfy the requirement. Subsequent to 2021, an individual who wants to engage in swaps activity will need to satisfy the requirement PRIOR to being approved as a swap AP at an FCM, IB, CPO, or CTA or as an acting AP at an SD.
The NFA has developed FAQs to assist with implementation. Click here to review.
These amendments and rule changes were discussed at workshops held for members in February. Click here to access the workshop materials.