NFA Guidance
The NFA-provided relief is intended to help firms (including CPOs and CTAs) that permit APs to temporarily work remotely from home offices or other locations that are not the main business address or a listed branch office of the firm, and without a branch office manager.
Generally, if an AP is located in a location other than the firm’s main business address: that location must be listed as a branch office with the NFA on the firm’s NFA Form 7-R; the branch office must have a branch office manager who has taken and passed the Series 30 licensing exam or qualified for an alternative; and the firm must audit the branch office on a periodic basis.3 These requirements apply whether or not the AP is engaged in activity requiring the AP registration from the remote location.
With many firm employees working from home or other remote locations as contingencies pursuant to their business continuity plans, the movement of APs to remote locations could have the potential to create many new branch offices and introduce new compliance burdens for firms. Recognizing that this is anticipated to be a temporary situation due to COVID-19 coronavirus, and expecting that these APs will return to their respective firms’ main offices once the firms no longer are operating under their business continuity plans, the NFA has determined not to take disciplinary action against firms for not listing these remote AP locations as branch offices and not taking the additional steps that would otherwise be necessary to operate these locations as branch offices.
However, the NFA expects that firms relying on this guidance will: (1) implement alternative supervisory methods to adequately supervise their remote APs’ activities; (2) meet recordkeeping requirements; and (3) document the procedures drafted to cover these arrangements.
Footnotes
1) No-Action Positions for Commodity Pool Operators in Response to the COVID-19 Pandemic, CFTC No-Action Letter No. 20-11 (Mar. 20, 2020).
2) Coronavirus Update—NFA Branch Office Requirements, NFA Notice I-20-12 (Mar. 13, 2020).
3) See NFA Compliance Rule 2-9; see also, Compliance Rule 2-9: Supervision of Branch Offices and Guaranteed IBs, NFA Interpretive Notice No. 9019.