NATIONAL FUTURES ASSOCIATION
2015 Annual Pool Financial Statement Requirements
The National Futures Association (“NFA”) has distributed reminder notices regarding filing requirements under Commodity Futures Trading Commission (“CFTC”) Regulations 4.7, 4.12 and 4.22 (“Annual Report Notice”) to Registered commodity pool operators (“CPOs”). Pursuant to CFTC Regulations, CPOs are required to distribute a certified audit (“Annual Report”) to investors within ninety (90) days after the fiscal year-end. Additionally, the Annual Report must be submitted to the NFA through the EasyFile system. For the December 31, 2015, fiscal year end, the Annual Report is due to the NFA and investors by March 30, 2016.
CPO can request a due date extension, through EasyFile, pursuant to CFTC Regulation 4.22(f). An extension request must be submitted before the March 30th due date. Failing to comply with the filing deadlines may result in disciplinary action.
CPOs will receive an Annual Report Notice with filing requirements specific to their structure/registration status. The Annual Report Notice will include additional information (as applicable) regarding ceased pools, fund of funds and EasyFile instructions. The CFTC issues annual guidance letters to assist CPOs and their public accounts, in complying with CFTC Regulations when preparing Annual Reports. CPOs should refer to the CFTC annual guidance letters for additional instructions.
NFA Bylaw 1101 and Compliance Rule 2-36(d)
On January 14th, the NFA released Notice to Members I-16-03, to outline Member obligations under NFA Bylaw 1101 and Compliance Rule 2-36(d) with respect to CPOs/commodity trading advisors (“CTAs”) exempt from registration. NFA Bylaw 1101 (“Bylaw 1101”) and Compliance Rule 2-36(d) (“Rule 2-36d”) prohibit NFA Members from doing business non-NFA Members. To ensure compliance with Bylaw 1101 and Rule 2-36d, Members are prohibited from doing business with non-NFA Members and are required to determine wither a person or entity is required to be registered with the CFTC, to be a Member of the NFA or exempt from registration.
The CFTC requires CPOs/CTAs claiming certain exemptions to annually affirm the applicable notice of exemption within sixty (60) days of calendar year end, by February 29, 2016, thus making it difficult for Members to comply with requirements of Bylaw 1101 and Rule 2-36d. As a result, a Member that takes reasonable steps to determine CFTC registration/NFA Member status of previously exempt person/entity will not be in violation of Bylaw 1101 or Rule 2-36d, if, between January 1 and March 31, 2016, they transact customer business with a previously exempt person that fails to become registered and a Member of NFA, file a notice affirming its exemption from CPO/CTA registration, or provide a written representation as to why the person is not required to register or file the notice affirming the exemption.
Additionally, Notice I-16-03 provides guidance for determining whether an exempt CPO/CTA has affirmed its exemption and expectations for Members transaction customer business with an exempt CPO/CTA that has not affirmed its exemption.
Enhancements to the CPO Quarterly Report
Changes have been made to the CPO quarterly report (“Form PQR”) for the period ending December 31, 2015. The NFA announced the enhancements to Form PQR on January 13th. Changes to Form PQR are as follows:
- Filers are now able to add certain pools to list of pool included in the filing index;
- The ability to add a ceased date for a layer in the rate-of-return table in Schedule A; and
- An updated schema is now available in the XML documentation section.
Additional information regarding the changes to Form PQR has been published by the NFA in Notice to Members I-16-02.
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.