Effective date for NFA rule modifying Member Questionnaire requirements and new prominent inactive status banner in NFA's BASIC system - 21 May 2024

As part of NFA's membership application process and at least annually, all NFA Members are currently required to complete NFA's Member Questionnaire1. Responses to the Questionnaire provide NFA with material information regarding Members' operations and are critical data sources for our oversight responsibilities. NFA recently adopted NFA Compliance Rule 2-52 and a related Interpretive Notice 9082 and amended Bylaw 301 modifying the Questionnaire's requirements. The Rule, Interpretive Notice and Bylaw amendments will be effective on October 15, 2024.

New semi-annual filing requirement for inactive Members

Compliance Rule 2-52 will require NFA Members to submit the Member Questionnaire at least annually and more frequently in certain instances as required by NFA. The related Interpretive Notice specifies that a Member not currently conducting commodity interest business will be subject to a new semi-annual filing requirement. Those Members who respond "no" to the applicable Member Questionnaire's questions will be considered not currently conducting commodity interest business and inactive.

This new semi-annual filing requirement for inactive Members will first impact firms with a November 1, 2024 annual filing deadline, making the first semi-annual filing due date May 1, 2025.

NFA Compliance Rule 2-52 will also require Members to promptly update the Questionnaire whenever there are material changes to their business operations that render information previously provided inaccurate or incomplete. The Interpretive Notice provides examples of what NFA believes constitutes material changes, but NFA will rely upon Members to make these individual determinations and update the Questionnaire accordingly.

NFA will continue to notify Members of Questionnaire deadlines. Further, consistent with NFA's current filing requirements, if a Member fails to submit the Questionnaire by its deadline, NFA will deem the failure a request to withdraw from NFA membership.

Inactive status prominently displayed in NFA's BASIC system

Beginning October 15, 2024, NFA will prominently display a Member's inactive status on the firm's profile page in NFA's BASIC system for any Member indicating on its Questionnaire that it is not currently conducting commodity interest business. This new inactive banner will provide valuable information to the public regarding a Member's commodity interest activity.

The new semi-annual filing requirement for inactive Members will ensure the information displayed in NFA's BASIC system is accurate.

Review and submission requirements for all Member Questionnaires

Compliance Rule 2-52 sets forth specific requirements regarding who at the firm must review and submit the Questionnaire. To ensure that the individual reviewing and submitting the Questionnaire is sufficiently knowledgeable about a Member's business operations, Compliance Rule 2-52 requires that:

• For Members solely registered as a swap dealer, an individual that is a principal review and submit the Questionnaire; and
• For all other Members, an individual that is both a registered associated person (AP) and a listed principal review and submit the Questionnaire.

In preparation for the October 15, 2024, effective date, NFA encourages Members to identify the AP and/or principal who will review and submit the Questionnaire on the firm's behalf. While anyone at the firm who is knowledgeable about the firm's operations may continue to answer questions on the Questionnaire, an AP and/or principal must review and submit the Questionnaire.

The individual responsible for submitting the Questionnaire must obtain a new level of "Submit" access in NFA's Online Registration System (ORS), allowing NFA to verify that the designated individual is an AP and/or listed principal, as applicable. NFA anticipates this capability will be available by mid-summer, at which time, NFA will provide further instructions regarding how to designate an individual in ORS.

In addition, all FCM Members—regardless of whether NFA is their designated self-regulatory organization—currently submit certain sections of the Questionnaire to NFA. NFA uses this information to fulfill its regulatory responsibilities. Accordingly, NFA amended NFA Bylaw 301 to make this an explicit requirement.

NFA's CPO/CTA, FCM, IB and Swap Participant Advisory Committees supported the adoption of NFA Compliance Rule 2-52, Interpretive Notice 9082 and the Bylaw 301 amendments, which were unanimously approved by NFA's Board of Directors at its February 15, 2024, meeting.

NFA's February 27, 2024, rule submission letter to the CFTC contains more detailed information regarding the Rule, Interpretive Notice and Bylaw amendments.

If you have any questions regarding the amendments, please contact Tracey Hunt, Director, Futures Compliance (thunt@nfa.futures.org or 312-781-1284).

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