Housekeeping, Reminders and Updates--Dec 2014

On December 1st, the NFA released Notice to Members I-14-33 regarding the CFTC’s recent approval on the NFA’s Interpretive Notice entitled “NFA Compliance Rules 2-4 and 2-36: Prohibition on the Use of Certain Electronic Funding Mechanisms.” Effective January 31, 2015, the Interpretative Notice prohibits NFA Members from permitting customers to fund their futures and forex accounts with the use of a credit card or any other electronic method tied to a credit card. An example of another method tied to a credit card would be using payment facilitators such as PayPal that draw funds from credit card accounts. 

The NFA explains that members may still continue to accept other methods of electronic funding, such as debit cards, which draw funds directly from a customer’s account at their designated financial institution. However, for this service to be provided, Members will have to distinguish between an electronic funding method that draws money from the customer’s bank account and funds coming from a traditional credit card account. Members will have to make this distinction prior to accepting funds so that they are able to reject the credit card before accepting customer funds. 

The NFA further explains that this prohibition applies to new customers, as well as funding made by existing customers, on January 31, 2015. 

As a reminder, Members and Registrants of the National Futures Association have the responsibility of completing certain requirements on an annual basis. The following list is provided as guidance for regulatory requirements that might need to be addressed before year-end. This list does not capture all requirements.

1. Complete the Annual Update on the anniversary date of the firm’s registration which includes:
2. Completing the electronic Annual Registration Update;
3. Electronically submitting the firm’s Annual Questionnaire on NFA’s website which includes firm and disaster recovery information as well as a questionnaire for each category of registration; and
4. Paying your annual registration fees and NFA dues.
5. NFA Self-Examination Checklist located on NFA’s website at: Self-Examination Questionnaire For FCMs, FDMs, IBs, CPOs and CTAs.
6. Implement and maintain a written Anti-Money Laundering (“AML”) program.
7. Review and test your Business Continuity and Disaster Recovery Plan.
8. Provide Ethics training as outlined in your firm’s Policies and Compliance Procedures.
9. Provide every current customer with your firm’s Privacy Policy.
10. Annual affirmation of exemptions or file any new exemptions.

NOTE: Failure to satisfy all the requirements in the annual update process within 30 days of the firm’s anniversary date will be deemed a request to withdraw its NFA registration and/or Membership.

For further information about any of the topics covered, please feel free to contact Ruddy Law Office, PLLC (www.ruddylaw.com) or 202-797-0762.