The National Futures Association is the SRO for the futures industry in the US; it held its most recent board meeting last month.
Thomas Sexton is the Chief Executive Officer of the NFA, and he released a video summarizing what happened.
He said each August board meeting is dedicated to updating the board on how the goals for that fiscal year had been met, in this case FY 2019.
Sexton said that the NFA had accomplished a great deal in anticipation of the SWAPs Proficiency Requirements which go into effect for all member firms in January 2020.
He said the NFA moved forward on content development, system development, member education, and approved rules which were also then approved by the Commodities Futures Trading Commission (CFTC).
While the NFA is an SRO it is structured such that all rules and regulations must be approved by the CFTC which oversees it.
He said the NFA made progress on cyber-security, “a risk that we face here at NFA,” he said.
The NFA completed the SOC 2 certification. “SOC stands for ‘system and organization controls,’ and the controls are a series of standards designed to help measure how well a given service organization conducts and regulates its information.” The website Evariant stated. “The purpose of SOC standards is to provide confidence and peace of mind for organizations when they engage third-party vendors. A SOC-certified organization has been audited by an independent certified public accountant who determined the firm has the appropriate SOC safeguards and procedures in place.”
Sexton said that in addition to the SOC 2 certification, “Each year we have an independent test done of our application and infrastructure with regard to security. That was also completed.”
Timothy McHenry is Vice President of Information Systems and he also added, “During our recent August board meeting, I delivered our annual security report. That report was extensive and had summarized NFA’s actions to protect our systems and data. It also covered several new initiatives to further enhance NFA’s defense in-depth security posture. Ultimately, our goal is to advance a culture of security.”
Sexton said several of their systems also went through upgrades including the FACTS system, the exam software, and the basic system, which went through a redesign in 2019, Sexton said.
“We completed a number of measures that focused on regulatory risk, from virtual currency, to member cyber-security, all very important,” he said.
Maureen Downs is the Vice President of the Board of NFA and she said the board approved some rule changes as well.
“The board a number of changes to CPO (Commodity Pool Operator) and CTA (Commodity Trading Advisor) recording and disclosure. One amendment addresses guidance to CTO’s on the presentation of break-even analysis,” she stated. “Another, updates guidance to CTA’s on performance reporting and disclosure requirements.”