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If you haven’t recently completed a Self-Exam Questionnaire, the new year is a good time to reflect. Although the questionnaire is one of the annual requirements of NFA membership, it should be far more than a box-ticking exercise. As well as picking up potential new risks in the constantly changing pandemic landscape, a well-considered questionnaire will help give a regular view of your compliance arrangements and peace of mind that you have everything covered – particularly if you are due an NFA examination.
NFA annual requirements – a reminder
NFA Compliance Rule 2-9 places a responsibility on member firms to diligently supervise their employees and agents in the conduct of their commodity interest activities. This means establishing and implementing processes which will give you an appropriate level of supervision of your operations. Given the changes to operations arising from the global pandemic, flexibility is key – both in implementing these programs and performing routine reviews to make sure they are functioning effectively.
On an annual basis NFA member firms are required to perform several annual requirements, including completing NFA’s Annual Questionnaire, completing the NFA Self-Exam Questionnaire and filing any new exemptions and affirm applicable pool exemptions through NFA’s exemption system. Although due every 12 months, the cycle for completing the Self-Exam Questionnaire is more flexible than other requirements and where possible it makes sense to start here.
Using the NFA Self-Exam Questionnaire to underpin your compliance framework
Even with the best of intentions, compliance and regulatory activities often take second place to activities that drive revenue. At least annually, firms are encouraged to perform a thorough review of their operations and specifically their NFA regulated business using NFA’s Self-Exam Questionnaire.
The Questionnaire is updated frequently to capture applicable updates/guidance issued by the NFA and/or CFTC, as a best practice, firms should always retrieve the Questionnaire from NFA’s website to ensure you are using the most current version of the document.
On completion of the review, an appropriate supervisory person must sign and date the attestation stating that he/she has reviewed and evaluated the Member’s current procedures using NFA’s Self- Exam Questionnaire and the current procedures are adequate to meet the Member’s supervisory responsibilities. Signed attestations should be readily available for the most recent two years and retained for the most recent five years.
Carrying out the Self-Exam review process presents an opportunity to evaluate your existing compliance program – particularly if you are due for an NFA examination. Firms are required to, among other things, ensure that requisite training is completed which is a key area of focus in an NFA examination. Once completed you can use the assessment to make necessary updates to your policies, address any areas of concern and help compliance personnel reinforce a culture of compliance among employees.