On Feb. 5, 2019, I attended the Annual NFA Members Meeting at NFA offices in Chicago. Maureen Downs, Vice-Chairman of the NFA Board of Directors and Tom Sexton, President and Chief Executive Officer of the NFA along with several executive level members of the NFA staff attended the meeting. I was the only attendee from the industry.
The following issues were discussed:
ISSP Up-dates (Effective April 1):
NIBA members had concerns about the cost of implementing new requirements, third-party vendor liability and whether NFA exams in this area would take the form of education versus enforcement for a period of time after the changes become effective.
NFA addressed cost concerns by pointing out that although the requirements are specific, implementation is quite flexible -- it should be tailored to the size, type, etc. of the IB itself. This is not a one-size-fits-all issue. All registrants should conduct due diligence on critical vendors and avoid using third parties whose security standards are not comparable to the Registrant's. NFA is sponsoring two workshops in late February to educate members on the updated ISSP requirements and their examinations conducted after April 1st will look for compliance with the new requirements.
CTA/CPO Issues
CPO Internal Controls:
NIBA Members had no questions on this issue. However, two members did have questions regarding current registration requirements for CTAs without AUM. NFA is not discussing changing the current requirements.
Supervision of GIBs and Branch Offices:
NFA is currently reviewing its requirements in this area. NIBA is closely following the review and report to the members as it progresses.
Bitcoin:
NIBA members wondered if NFA had a position on bitcoin and virtual currencies in general - does NFA like the product or not?
NFA has published an Interpretive Notice for IBs regarding disclosure requirements for members engaging in virtual currency activities, and observes there is an interest in the product in general. NFA has no position as to whether bitcoin or other crypto-currencies are “good” or “bad” products or for the industry.
NFA staff welcomed questions and suggestions from NIBA members. Our community is represented well and vigorously on both the IB and the CTA Advisory Boards of the NFA. I suggested follow-up on several of the issues discussed including written articles and continued in-person communication. NIBA will continue to update our members.
