NATIONAL FUTURES ASSOCIATION
Commodity Pool Operators
The National Futures Association (“NFA”) has modified the EasyFile system for the annual pool financial statements submitted by commodity pool operators (“CPOs”). The NFA announced the changes to the annual pool financial statements in the February 10th Notice to Members, Notice I-15-09. Changes to the annual pool financial statements are effective for financial statements dated after November 29, 2014. EasyFile has been updated to now include a new Cover Page for each pool operated by the CPO. The pool Cover Page includes questions regarding whether the annual report is audited. Additional questions will be required if the CPO Member indicates that the annual report is not audited. The NFA has also added supplemental questions concerning the structure of the reporting pool.
The annual pool financial statements are part of the Annual Report that CPO Members are required to distribute to pool participants within 90 days after the pool’s fiscal year end. The Annual Report is to be certified by an independent public accountant and filed electronically with the NFA. The NFA has prepared a PDF detailing the changes to the EasyFile report.
Futures Commission Merchants
The NFA released a January 26th Notice to Members, Notice I-15-08 in response to Commodity Futures Trading Commission (“CFTC”) No-Action Letter 14-154 dated December 22, 2014 (“Letter 14-154”). Letter 14-154 provides time-limited no-action relief for futures commission merchants (“FCMs”) from compliance with the timing requirements of CFTC Regulation 3.3(f)(2) for submitting the annual reports by chief compliance officers (“CCOs”). The relief applies to FCMs with a fiscal year ending on or before January 31, 2015.
Part of CFTC Regulation 3.3 requires FCMs to designate a CCO that meets certain qualifications and outlines the duties and responsibilities of the CCO. The designated CCO of the FCM is required to prepare, sign and submit an annual CCO report (“CCO Annual Report”). The CCO Annual Report must include information enumerated in Regulation 3.3, which includes a certification by the CCO. Regulation 3.3 also requires FCMs to file their report no later than 60 days after their fiscal year end. Letter 14-154 extended the reporting deadline to 90 days after the fiscal year end.
The NFA requires Members FCM to provide the NFA with a copy of its CCO Annual Report, which is filed through the WinJammer filing system within 90 days from the firm’s fiscal year end. The purpose of the January 26th Notice was to remind FCMs of the available extension of the deadline for firm’s unable to meet the 90-day deadline. A 30-day extension is available for FCMs unable to meet the deadline. Any FCM Member unable to meet the required deadline is permitted to file the CCO Annual Report no later than 120 days after the fiscal year end, provided that by the 90-day deadline, the firm reports any non-compliance events that occurred during the fiscal year that is subject to the report to the CFTC and the NFA. Please note, the no-action relief is limited to annual reports submitted for fiscal years ending on or before January 31, 2015. The relief is not granted to annual reports for fiscal years ending after January 31, 2015. Annual reports for fiscal years ending after January 31, 2015 must be filed within 60 days of the fiscal year end, as per CFTC Regulation 3.3.
Swaps Dealers and Major Swap Participants
As a result of Letter 14-154 (referenced in the section above), the NFA also released a January 23rd Notice to Members concerning CCO reports for swaps dealers (“SDs”) and major swap participants (“MSPs”), Notice I-15-05. Pursuant to NFA Compliance Rule 2-49, SDs and MSPs are required to submit reports and other prescribed records to the NFA and CFTC in the form and manner outlined by the NFA. This includes the CCO Annual Report required by CFTC Regulation 3.3.
Part of CFTC Regulation 3.3 requires SDs and MSPs to designate a CCO that meets certain qualifications and outlines the duties and responsibilities of the CCO. The designated CCO is required to prepare, sign and submit a CCO Annual Report. The CCO Annual Report must include information enumerated in Regulation 3.3, which includes a certification by the CCO. Regulation 3.3 also requires SDs and MSPs to file their report no later than 60 days after their fiscal year end. Letter 14-154 extended the reporting deadline to 90 days after the fiscal year end. A 30-day extension is available for SDs and MSPs unable to meet the deadline. Any FCM Member unable to meet the required deadline is permitted to file the CCO Annual Report no later than 120 days after the fiscal year end, provided that by the 90-day deadline, the firm reports any non-compliance events that occurred during the fiscal year that is subject to the report to the CFTC and the NFA.
The purpose of the NFA’s Notice to Members was to inform SDs and MSPs of the new filing requirements, effective for the fiscal year ended October 31, 2014. Beginning with the CCO Annual Report for such date, SDs and MSPs will be required to submit reports through the WinJammer system. Reports submitted through WinJammer satisfy filing with the NFA and the CFTC. SDs and MSPs will no longer submit reports through the CFTC’s reporting system. Notice I-15-05 provides step-by-step instructions for filing the CCO Annual Report through WinJammer.
Forex Dealer Members
Effective January 26, 2015, the NFA increased, until further notice, the minimum security deposits required to be collected and maintained by forex dealer members (“FDMs”) under NFA Financial Requirements Section 12. The NFA provided notice of the increase in the January 23rd Notice to Members, Notice I-15-07.The Notice required immediate attention and explained the additional increased in required minimum security deposit for forex transactions. The increase was made by the NFA’s Executive Committee pursuant its authority granted under NFA Financial Requirements Section 12. NFA Financial Requirements Section 12 covers security deposits for forex transactions with FDMs.
The minimum security deposits required to be collected and maintained by FDMs has increased for transactions involving the Swiss franc, Swedish krona and Norwegian krone. Prior to the increase, the minimum security deposit was 2%. Effective 5 pm (EST) on January 26, 2015, the minimum security deposit increased to 5% for transactions involving the Swiss franc and to 3% for transactions involving the Swedish krona and Norwegian krone. Furthermore, FDMs were alerted that the NFA will be continuously monitoring market conditions and additional increases to the Swiss franc, Swedish krona and Norwegian krone, as well as other currencies, could occur as a result of market conditions.
Due to the volatility of forex markets, the NFA’s Executive Committee has also increased the Section 12 minimum security deposits required to be collected and maintained by FDMs for transactions involving the following currencies: Japanese yen (3%); Australian dollar (3%); Russian ruble (20%); Brazilian real (9%); and the Mexican peso (6%). As stated in the Notice, the increased became effective January 26, 2015.
For further information about any of the topics covered, please feel free to contact the Ruddy Law Office, PLLC (www.ruddylaw.com) or 202-797-0762.