NFA – Proposed Adoption of Interpretive Notice – Related to third party providers and using subordinated debt

March 2, 2021 – NFA proposed adoption of NFA interpretive notice titled NFA Compliance Rule 2-9, and Rule 2-36 on members’ use of 3rd-party service providers and subordinated debt use.

Third-Party Use Guide
If outsourcing regulatory functions to third parties need to adopt a written supervisory framework of outsourcing activity, NFA considered other regulators for member guide. Includes onboarding, due diligence, reporting, monitoring, termination, and recordkeeping.

SD Financial Requirements
Adopted minimum capital, other financial requirements for NFA Member swap dealers (SDs) and major swap participants (MSPs) not subject to a prudential regulator. To mirror other prudential regulator rules and added subordinated debt agreements and other requirements regarding financial reporting and notification requirements. Detailed financial and reporting requirements added for those provisions for SDs.

NFA to notify members of effectiveness within 10 days of submissions to CFTC.

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