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The US NFA’s fine of $150,000 handed to a UK-based broker and swap dealer last month serves as a sharp reminder to keep track of overseas compliance requirements.
The fine of ED&F Man Capital Markets Limited was issued for a failure to ensure all of the firm’s Associated Persons (APs) completed proficiency requirements, ensuring a minimum standard of market and regulatory knowledge, by NFA’s deadline of January 31, 2021. All APs are required to meet these minimum standards, regardless of their location, when they are appointed by a firm registered with the NFA.
Many UK brokers offer their services to US clients via the direct registration route – becoming FINRA registered broker dealers for securities markets, or introducing brokers, futures commissions merchants or swap dealers with the NFA for commodities and derivatives markets. These registrations come with ongoing compliance obligations, and therefore a need to keep track of guidance and circulars regularly issued by both the FINRA/SEC and NFA/CFTC.
Keeping track of your regulatory obligations in a third country can be tough, especially where no local presence is held. In recent years there have been a growing number of fines and regulatory censures for firms either misinterpreting the registration requirements in the US, or failing to keep pace with evolving compliance requirements.
If you are a UK broker with US regulatory exposure, our Global Capital Markets practice has local US experts who can help. We regularly work with clients to:
- advise on the interpretation of the US regulatory perimeter, and identify key compliance risks associated with FINRA and NFA registration
- help you keep track of your US compliance obligations on an ongoing basis
- build compliance monitoring plans which account for a multi-jurisdictional regulatory footprint
- help you prepare for FINRA and NFA inspections.
