As Commodity Futures Trading Commission (CFTC) Members, National Futures Association (NFA) of commodity society member or currency at the close of another year also triggers a series of regulatory obligations. At least once a year (and sometimes more often), both CFTC and NFA regulations, rules dictate that FCM, IB, CTA and CPO adhere to a variety of ongoing review of annual policy and operational requirements test. These requirements, as well as how your company intends to meet them should be detailed in the company operational procedures. Does your company have a plan for adherence to these requirements? Best of the requirements for your business in 2010 closes and 2011 begins
In the following several annual requirements are discussed further losses. Each FCM, IB, CTA or CPO will have similar obligations, but that does not mean that all policies for review shall be uniform. Every business commodity or currency registered in the United States has an obligation to maintain procedures customized to fit their specific operations. Thus, each of the discussion that follows is based on a generalization of what most companies should be doing year-end. This presentation is not inclusive or exhaustive of all requirements of the company and therefore should not be invoked independently. For more information in this area interested persons should contact a competent professional advice to help.
Annual requirements NFA
Every 365 days (not necessarily read every December 31) the NFA member firms must complete a series of tasks related to compliance. To begin with all companies must complete the annual questionnaire for membership of the NFA. This document is intended to provide information on the operations of the signing of the NFA and can be accessed online through the online system for registration of NFA (“SRO”). Similarly at least once a year, companies are required to update their registration information by submitting an electronic update of annual enrollment. This document ensures further any registration information on file with the NFA is accurate. Finally, and probably goes without saying, but many companies forget, membership dues must be submitted no later than the anniversary date of the registration of your company. In addition to the minimum companies should do the following at least once a year:
· NFA Annual Questionnaire Complete
· File an electronic record of annual update
· Pay membership fees NFA
General Comments and Tasks
As for the internal training requirements, depending on the company’s operations, employees may be required to take certain number of annual training. All FCM and IB must maintain an adequate anti-money laundering (AML) policy that includes a provision for annual AML training. This training must be provided (at least) to employees who work in areas susceptible to money laundering as possible. Also, depending on internal policies, a number of obligations may be other training for employees. Company prudent idea to review the internal procedures or talk to a professional commodity specific performance of its obligations. These tests may include, among other things, ethics training, operational best practices training, or to provide lessons on applications for the right customers.
Finally in this area of business are also required to review all company policies to ensure that procedures are adequate for current operations. An example of this policy review would be required annually test the recovery of the company’s business continuity disaster (“NDRC”) of the plan. In this case, the applicable company personnel are required to work step by step through the NDRC to expose potential weaknesses. This review should be documented in writing, weaknesses, needs attention, and if changes are made to employees must be notified in a timely and reasonable. In this area, my firm offers a complete examination of evidence that could be used to help your company with many of these obligations. Some common things companies should consider the end of the year are:
· Sending privacy notices to customers at least once a year
· Notifying customers of any material change in business
• Ensure that employees receive adequate training applicable
Proof of reasonableness various firm policies
· Visit the branch at least once a year
For the CFTC registrants their financial reporting obligations are arguably the most important area in a full compliance review. Here errors can lead to costly fines, disciplinary measures, and in extreme cases quickly force a company out of business. Interestingly, although this aspect of running a commodity exchange or currency is extremely important, many people simply look beyond this area of your business. Instead of taking this position a lot of time should be devoted to ensure year-end books and records have been prepared properly and accurately. This is especially true for companies that must file reports with the CFTC and the NFA on a recurring basis.
FCM, IB, CTA and CPO in general, all required to submit annual financial reports should be addressed. Despite the CTA are not required to file financial statements that are required to maintain accurate books and records, as well as a complete record of all client outcomes. Similarly, Futures Commission Merchants, Introducing Brokers, and Commodity Pool Operators are required to submit specific financial information with the Commodity Futures Trading Commission. These documents must be submitted through the National Futures Association through various channels of electronic communication self-regulatory body. More specifically certain FCM and IB must submit a non-GAAP-FR FR-FCM or an IB / FOCUS reports. In addition to this they must also audited and certified financial statements produced by a third party accounting firm. In the case of CPO’s must submit their reports for each of their respective groups, as appropriate according to their record type. In this area the competent staff assess general ledger of the company to ensure that all financial transactions are accurately recorded. After doing all the supporting information required to prepare financial statements should be collected for submission to the signing of third party accounting firm certificate.
As a former auditor of the NFA and a veteran of consulting I have seen many examples of companies that have breached its annual needs. If these companies were not aware of their needs or just questions that do not forgotten. Violations of CFTC and NFA rules can have serious consequences and put a damper on the beginning of another brilliant way for the new year.