Disciplinary Information FAQs | NFA (2024)

FAQs

What is the NFA compliance rule 2 4? ›

NFA Compliance Rule 2-4 requires all Members and Associates to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their commodity futures business. This includes a requirement to deal fairly with customers and other market participants at all times.

NFA Compliance Rule 2-51 imposes new anti-fraud requirements, just and equitable principles of trade obligations and supervisory responsibilities on NFA Members and their personnel in connection with digital asset commodity activities, including spot or cash market activities.

RULE 2-5.

Each Member and Associate shall cooperate promptly and fully with NFA in any NFA investigation, inquiry, audit, examination or proceeding regarding compliance with NFA requirements or any NFA disciplinary or arbitration proceeding.

Notices to Members

NFA Compliance Rule 2-7 generally prohibits a Member from permitting an associated person (AP) to act as a branch office manager unless the individual has taken and passed NFA's Branch Office Manager Examination (Series 30).

NFA Compliance Rule 2-9(d) places a continuing responsibility on each Swap Dealer and Major Swap Participant (collectively SD) Member to diligently supervise its employees and agents in the conduct of their swap activities for or on behalf of the Member.

NFA Compliance Rule 2-13 requires, in pertinent part, that each Member CPO which delivers a disclosure document under CFTC Regulation 4.21 must include in the disclosure document a break-even analysis which includes a tabular presentation of fees and expenses.

Rule 38a-1 provides investment company complexes with flexibility in determining which of its affiliated Service Providers should be covered by its Compliance Procedures. assesses the adequacy of the Service Provider's compliance controls.

Compliance Rule 2-29(b)(6) provides that any testimonial used in promotional material must be representative of all reasonably comparable accounts, prominently state that the testimonial is not indicative of future performance, and, if applicable, state that it is a paid testimonial.

In 1997, the SEC adopted Rule 3a-4 of the Investment Company Act of 1940 (the “Rule”) which provides a non-exclusive safe harbor to exclude certain similarly-managed accounts, such as model portfolios, from the definition of an investment company ( e.g., a mutual fund).

(a) Grant of Discretion Must Be in Writing.

No Member or Associate shall exercise discretion over a customer's commodity futures or cleared swaps account unless the customer or account controller has authorized the Member or Associate, in writing (by power of attorney or other instrument) to exercise such discretion.

What is compliance rule 2 30? ›

Rule 2-30 is intended to define "high standards of commercial honor and just and equitable principles of trade" as applied to a Member's procedures for exchanging information with new futures or cleared swaps customers at the time they become customers.

Compliance Rule 2-34(a) provides that Member CTAs may include interest earned on actual funds but may not impute interest on other funds when calculating net performance. The CTA must be able to verify the amount of interest earned on the funds if the CTA includes that interest as part of its net performance.

NFA Compliance Rule 2-9 places a continuing responsibility on every Member to diligently supervise its employees and agents in all aspects of their futures activities. The rule is broadly written to provide Members with flexibility in developing procedures tailored to meet their particular needs.

NFA Compliance Rule 2-43 prohibits a forex dealer member (FDM) from cancelling or adjusting a customer account in a manner that would directly or indirectly change the price of the executed order except under two limited circ*mstances.

Additionally, Compliance Rule 2-24 prohibits an SD or MSP from having associated with it any individual who is acting as an associated person as defined in subsection 6 of the Associated Person definition under CFTC Regulation 1.3 who has not satisfied NFA's Swaps Proficiency Requirements.

NFA Compliance Rule 2-49 authorizes NFA to require SDs to promptly submit relevant information to NFA in the form and manner prescribed by NFA.

NFA Compliance Rule 2-49 requires swap dealers (SD) to promptly submit to NFA upon request any reports, documents or notices, including those required by CFTC Regulation 3.3 or Part 23 of the CFTC's regulations.

For a CPO, NFA Compliance Rule 2-13(b) provides that a CPO's disclosure document must include break-even analysis presented in the manner prescribed by NFA's Board of Directors, which is described in a separate interpretive notice. (See Interpretive Notice Compliance Rule 2-13: Break-Even Analysis.)

NFA Compliance Rule 2-50 requires CPO Members to file notice with NFA when a market or other event affects the ability of a commodity pool to fulfill its obligations to participants.

Regulation M Rule 105

The rule is designed to prevent manipulative short selling just prior to the pricing of a follow-on or secondary offering and to facilitate pricing based on the natural market forces of supply and demand. Rule 105 is prophylactic. Thus, its provisions apply irrespective of a short seller's intent.

What is Rule 17j 1 requirements? ›

Rule 17j-1 under the 1940 Act makes it unlawful for investment company personnel and other “Access Persons” to engage in “fraudulent, deceptive or manipulative” practices in connection with their personal transactions in securities when those securities are held or to be acquired by an investment company.

Rule 206(4)-7 requires an investment adviser to (1) adopt and implement policies and procedures reasonably designed to prevent violation of the Advisers Act and the rules thereunder by the investment adviser or its supervised persons; (2) review the adequacy of the policies and procedures and effectiveness of their ...

NFA Compliance Rule 2-29 requires Members to submit to NFA for pre-approval certain types of promotional material designed to reach a public audience through mass media. This material must be submitted 10 days prior to first use.

15c3-3(b)(1) A broker or dealer shall promptly obtain and shall thereafter maintain the physical possession or control of all fully-paid securities and excess margin securities carried by a broker or dealer for the account of customers.

Rule 17a-4 currently requires a broker-dealer to maintain and preserve electronic records exclusively in a non-rewriteable, non-erasable format (also known as a write once, read many (“WORM”) format). The amendments to Rule 17a-4 add an audit-trail alternative to the WORM requirement.

The Rule requires prompt notification on the occurrence of matters that materially affect the fair value of investments whose fair value is determined by the valuation designee within a time period determined by the board, but in no event later than five business days after the valuation designee becomes aware of the ...

NFA Compliance Rule 2-46 requires NFA Member CPOs and CTAs (with reporting requirements under CFTC Regulation 4.27) to file NFA Forms PQR and PR, respectively, on a quarterly basis.

NFA Compliance Rules 2-9, 2-36 and 2-49, as applicable, require NFA Members to develop, maintain and implement an appropriate ISSP in light of the importance of protecting the integrity of their technology systems.

Therefore, NFA Compliance Rule 2-45 prohibits CPOs from permitting a commodity pool to use any means to make a direct or indirect loan or advance of pool assets to the CPO or any other affiliated person or entity.

4.13(a)(2) - Small Pool Exemption

Person operates pool(s) with total gross capital contributions in all pools operated or intended to be operated that do not exceed $400,000 and none of the pools operated has more than 15 participants at any time.

What is compliance rules? ›

Compliance means that a company adheres to the applicable rules and laws. This includes both country specific laws and requirements from the regulatory authorities as well as internal company directives. A range of tools and process can be implemented and used by a company to bring about good compliance.

Additionally, NFA Compliance Rule 2-23 provides that a guarantor FCM or RFED (i.e., FDM) is jointly and severally subject to discipline by NFA for violations of NFA Requirements committed by an IB guaranteed by the FCM or FDM, and NFA's Business Conduct Committee has initiated disciplinary action under Rule 2-23 in ...

NFA Compliance Rule 2-35 permits Member CPOs to conduct initial customer solicitations with a profile document, provided that a customer is given the disclosure document prior to investing in the pool.

RULE 206. REGISTRATION OF ASSOCIATED PERSONS OF FUTURES COMMISSION MERCHANTS, INTRODUCING BROKERS, COMMODITY POOL OPERATORS, COMMODITY TRADING ADVISORS AND LEVERAGE TRANSACTION MERCHANTS. [Adopted effective April 4, 1988.

NFA Compliance Rule 2-48 obligates each Forex Dealer Member to file a daily electronic report of trade data with NFA. VIOLATIONS OF NFA COMPLIANCE RULE 2-43(a)(1): IMPROPERLY CANCELING RETAIL CUSTOMER FOREX ORDERS.

Rule 4.7 ( 17 C.F.R. 4.7) makes available an exemption from certain Part 4 requirements with respect to the operators of commodity pools whose participants are limited to "qualified eligible persons" and with respect to commodity trading advisors who advise "qualified eligible persons," as defined in the Rule.

(1) A Member shall exercise due diligence to learn the essential facts relative to the customer, including the customer's investment objectives and financial situation and, based upon those facts (including any information obtained under subsection (c) of this Rule, if applicable), a partner, officer, director, branch ...

Therefore, NFA Compliance Rule 2-45 prohibits CPOs from permitting a commodity pool to use any means to make a direct or indirect loan or advance of pool assets to the CPO or any other affiliated person or entity.

NFA Compliance Rule 2-46 requires NFA Member CPOs and CTAs (with reporting requirements under CFTC Regulation 4.27) to file NFA Forms PQR and PR, respectively, on a quarterly basis.

NFA Compliance Rule 2-49 authorizes NFA to require SDs to promptly submit relevant information to NFA in the form and manner prescribed by NFA.

What is NFA compliance Rule 2 34 A? ›

Compliance Rule 2-34(a) provides that Member CTAs may include interest earned on actual funds but may not impute interest on other funds when calculating net performance. The CTA must be able to verify the amount of interest earned on the funds if the CTA includes that interest as part of its net performance.

NFA Compliance Rules 2-9, 2-36 and 2-49, as applicable, require NFA Members to develop, maintain and implement an appropriate ISSP in light of the importance of protecting the integrity of their technology systems.

Pre-Approval Submissions. NFA Compliance Rule 2-29 requires Members to submit to NFA for pre-approval certain types of promotional material designed to reach a public audience through mass media. This material must be submitted 10 days prior to first use.

RULE 2-33.

Notice must be received within 24 hours of such acceptance. For purposes of this Rule, wire transfers and certified checks shall be considered immediately available funds for which notice is not required.

Section (a): General Rule

Rule 2-30 is intended to define "high standards of commercial honor and just and equitable principles of trade" as applied to a Member's procedures for exchanging information with new futures or cleared swaps customers at the time they become customers.

NFA Compliance Rule 2-50 requires CPO Members to file notice with NFA when a market or other event affects the ability of a commodity pool to fulfill its obligations to participants.

NFA Compliance Rule 2-9(c) also requires that FCMs and IBs designate an individual or individuals to oversee the anti-money laundering program, including the firm's CIP. This person may be the compliance officer that is responsible for other compliance areas of the firm.