The NFA Released Two Rule Submission Letters Regarding Branch Offices and Filing Fines
The first amends the NFA’s Interpretive Notice 9002 Registration Requirements: Branch Offices. The amendment updates the definition of branch offices to exclude locations where Associated Persons (“AP”) may be considered as working from home. The NFA’s revised definition excludes from the definition of branch office locations where AP’s work if those locations meet the following requirements:
“The AP(s) does not hold the location out to the public as the Member’s office;
The AP(s) does not meet with customers or physically handle customer funds at the location; and
Any CFTC or NFA required records created at the remote location are accessible at the firm’s main or applicable listed branch office as required under CFTC Regulation 1.31 and NFA Compliance Rule 2-10.”
The second amendment applies to the NFA Financial Requirements Section 10 involving initial margin model ongoing monitoring reports. The changes specifically apply to Swap Dealers and Major Swap Participant Members (collectively “SD Members”) and their required risk reporting under NFA Financial Requirements Section 17. The NFA has experienced a problem with SD Members filing their Initial Margin Model Ongoing Monitoring Reports (“IM reports”), which allow the NFA to “identify firms that may pose a heightened risk and allocate NFA’s resources accordingly.” The amendment is adding a $1,000 per business day late fee for the IM reports. This fee will be consistent with the late filing fees the NFA imposes on FCM, FDM, and IB members late financial filings. The NFA hopes to ensure filings are made in a timely fashion.