On March 24, the National Futures Association (NFA) issued Notice I-21-13 to advise member firms that the Interpretive Notice entitled, “NFA Compliance Rules 2-9 and 2-36: Members’ Use of Third-Party Service Providers” (Interpretive Notice) will become effective September 30.

The Interpretive Notice requires each member firm outsourcing regulatory functions to adopt and implement a supervisory framework over its outsourcing function to mitigate outsourcing-related risks. Member firms with existing supervisory framework for their third-party service providers are not required to implement a new framework, but should ensure such framework meets the requirements of the Interpretive Notice. The supervisory framework must address the following:

  • Initial risk assessment;
  • Onboarding due diligence;
  • Ongoing monitoring;
  • Termination; and
  • Recordkeeping.

Additionally, the NFA is in the process of developing a supplement to the Self-Examination Questionnaire to help member firms understand the requirements of the Interpretive Notice.

NFA Notice I-21-13, which includes a link to the Interpretive Notice.