Changes Coming to the NFA’s Member Questionnaire (Formerly Known as the Annual Questionnaire)

The National Futures Association (NFA) issued Notice to Members I-24-10 on May 20, 2024 regarding the amendments to the Member Questionnaire (formerly known as the Annual Questionnaire). The amendments include NFA Compliance Rule 252, NFA Interpretative Notice 9082(IN 9082), and NFA Bylaw 301(h). These amendments will become effective on October 15, 2024.

What’s changing?

One of the primary changes introduced by the NFA in these amendments requires all members (except swap dealers) to have the questionnaire reviewed, signed, and submitted by an individual who is both listed as a principal and registered as an associated person (AP). (Members solely registered as swap dealers must have the questionnaire reviewed, signed, and submitted by a principal.)

In addition, NFA members that have not started engaging in commodity interest activities will now be required to file the questionnaire semi-annually to introduce another layer of transparency.

NFA Bylaw 301(h)

The amendments to Bylaw 301(h) reflect the new NFA Compliance Rule 2-52. Failure to submit the questionnaire within 30 days of a request by the NFA in accordance with Compliance Rule 2-52 will be deemed a request to withdraw from NFA Membership.

NFA Compliance Rule 2-52 and NFA IN 9082

The “Annual Questionnaire” is being renamed the “Member Questionnaire” due to the change in frequency it will need to be filed by certain members.

Filing frequency

• Annually: If the member engages in commodity interest activities. NFA IN 9082 clarifies that the majority of NFA members will continue to file the questionnaire annually. As usual, the NFA will notify the member to complete and file the questionnaire by the prescribed date, which is typically on or after the anniversary of the member’s original membership date.
• Semi-Annually: If the member has not started engaging in commodity interest activities. NFA IN 9082 establishes that members who have answered “no” to questions regarding involvement in commodity interest activities will be considered as “Inactive” (although the NFA has not introduced a formal Inactive membership status). The “Inactive” status will appear prominently on a banner in the member’s NFA BASIC profile. The NFA will request the member complete specified sections of the questionnaire by a specific date.
• Promptly: If the member’s business operations have changed materially or the member starts engaging in commodity interest activities. Each member is in the best position to judge what constitutes a material change in its business operations. However, NFA IN 9080 sets forth specific circumstances that require members to update the questionnaire, namely, “engaging or disengaging in activities relating to commodity interest products, micro-contracts, retail forex or digital assets, algorithmic trading activities, or cloud computing; a significant increase or decrease in customer accounts; an IB’s revenue increases to exceed the designated threshold requiring the IB to comply with CFTC Regulation 1.35(a)(1)(iii); or, if a CPO has a pool that has just commenced operations.” Furthermore, members that are required to complete and file the questionnaire semi-annually should be mindful to update the relevant sections of the questionnaire promptly when they start engaging in commodity interest activities. If they do not act promptly, their status will continue to appear as “Inactive” in their NFA BASIC profile.

Questionnaire review and submission

A person who is both an AP and a principal must submit the questionnaire.

NFA Compliance Rule 2-52 requires that an individual who is a listed principal and registered associated person (AP) review, sign, and submit the Member Questionnaire and any updates. NFA IN 9082 explains that the questionnaire provides the NFA staff with critical and material information that allows the NFA to fulfill its oversight responsibilities. Therefore, an individual who is a listed principal and a registered AP, with sufficient knowledge of the member’s ongoing business operations, should review, sign, and submit the questionnaire.

This requirement may pose some challenges for large members as, generally, individuals who are listed both as principals and APs sit at the top of the organization and are not familiar with the NFA filing process and systems. The requirement to register as an AP applies to salespersons and anyone in the salespersons’ supervisory chain-of-command, not only those who directly supervise salespersons. A listed principal is, in essence, someone who controls a member’s business, has ownership interests in it, or has a particular title or function such as chief executive officer, chief financial officer, chief compliance officer, etc.

In our experience, compliance and operations teams have typically been responsible for completing and filing the questionnaire. The NFA Notice to Members clarifies that while anyone at the firm who is knowledgeable about the member’s operations may continue to fill out the questionnaire, a person who is both a principal and an AP must review and submit the questionnaire.

NFA Members, particularly large firms, should take the following actions to prepare for the changes to the questionnaire review and submission responsibilities:

• Identify from among their senior management who are listed both as principals and Aps; the individual who will review and the questionnaire.

• Provide the designated person with a new “Submit” access status in the NFA EasyFile system. This will allow the NFA to verify that the designated person is both a principal and an AP.

• Familiarize the designated person with the Member Questionnaire and the NFA’s EasyFile system, which requires login credentials and multi-factor authentication and may take some time to master.

Large firms may wish to explore the possibility of meeting this requirement by registering their CCOs as APs. (Many firms already list their CCOs as principals.) However, the NFA may not regard this approach as sufficiently aligned with the rationale for the new requirement, which is to have an individual, who is in the “supervisory-chain - of command”, take responsibility for signing and submitting the questionnaire.

How we help

The compliance environment has never been more complex or demanding. We can help you to navigate the evolving regulatory landscape while considering the complexity of your firm’s unique compliance requirements. ACA Signature can help.

With ACA Signature, you can choose the combination of compliance advisory, innovative technology, managed services, and cybersecurity to create a scalable solution that is right for your firm and gain expert insight, guidance, and support as you navigate emerging compliance and risk challenges.

Reach out to your ACA consultant, or contact us to find out how ACA Signature can help transform your firm’s compliance program.

Contact us