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Housekeeping

June 30, 2016

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Housekeeping, Reminders and Updates

Late Fee for CTA and CPO Quarterly Reports On June 21, 2016, the National Futures Association (“NFA”) announced an amendment to NFA Compliance Rule 2-46 (“Rule 2-46”), which will a impose late fee for commodity trading advisors (“CTAs”) and commodity pool operators (“CPOs”) quarterly reports filed after the due date. Form PQR is the quarterly report for CPOs and Form PR is the quarterly report for CTAs. As per the amendment, CTAs and CPOs will be fined $200 for each business day the quarterly report is past due. The effective date of the amendment to Rule 2-46 will begin with the third quarter reports for 2016. The NFA Notice to Members I-16-16 announced the amendment to Rule 2-46. The proposed amendment to Rule 2-46 was submitted to the Commodity Futures Trading Commission (“CFTC”) in May 2016. COMMODITY FUTURES TRADING COMMISSION Final Cross-Border Margin Rule In Press Release PR 73730-16, the...

HOUSEKEEPING, REMINDERS AND UPDATES

NATIONAL FUTURES ASSOCIATION CPO and CTA Quarterly Reporting Requirements for Period Ending March 31, 2016 Each commodity pool operator (“CPO”) Member and commodity trading advisor (“CTA”) Member with reporting requirements under Commodity Futures Trading Commission (“CFTC”) Regulation 4.27 is required to comply with National Futures Association (“NFA”) quarterly reporting requirements. NFA Compliance Rule 2-46 imposes quarterly reporting requirements on CPOs operating commodity pools and on CTA that direct trading of commodity trading interests. The CTA quarterly report (“Form CPR”) is used to collect general information about the reporting CTA and its trading program(s). For the period ending March 31, 2016, CTAs are required to submit Form CPR by Monday, May 16, 2016. A CPO must report specific information about the firm and the pools it operates on the CPO quarterly report (“Form PQR”). For the period ending March 31, 2016, CPOs are required to submit Form PQR by Tuesday, May...

Housekeeping, Reminders and Updates

Financial Crimes Enforcement Network The Financial Action Task Force (“FATF”) updated its list of jurisdictions with strategic anti-money laundering (“AML”) and counter-terrorist financing (“CFT”) deficiencies. In response, the Financial Crimes Enforcement Network (“FinCEN”) issued an advisory in January announcing the updates to the list of jurisdictions identified as having strategic deficiencies in their AML/CFT regimes. Countries with inadequate AML/CFT programs, as identified by FATF, are categorized as: (i) jurisdictions that are subject to FATF’s call for countermeasures or are subject to enhanced due diligence (“EDD”) due to their AML/CFT deficiencies; and (ii) jurisdictions identified by FATF to have AML/CFT deficiencies. Countries subject to EDD or countermeasures are identified on the FATF Public Statement and the list of countries with strategic AML/CFT deficiencies is available in FATF’s Improving Global AML/CFTC Compliance; On-Going Process. FinCEN’s advisory, FIN-2016-A0001, urges financial institutions to review the changes to the list of jurisdictions to ensure that...

Housekeeping, Reminders and Updates

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...

Housekeeping, Reminders, and Updates December 2015

COMMODITY FUTURES TRADING COMMISSION Extension of Time-Limited No-Action Relief from Certain Recordkeeping Requirements On December 8th, the Commodity Futures Trading Commission (“CFTC”) issued a press release regarding the no-action letter issued by the Pision of Swap Dealer and Intermediary Oversight and Pision of Market Oversight (Press Release: PR729-15) . The no-action letter extended the relief relating to records of oral communications, which was originally set forth in CFTC Staff Letter No. 14-147, from 2014. The relief in Letter No. 14-147 was set to expire on December 31, 2015. The 2014 letter granted no-action relief to commodity trading advisors (“CTAs”) that are registered with the CFTC and are members of designated contract markets or of a swap execution facilities from the requirement to record oral communications under CFTC Regulation 1.35(a). Further, the relief is also granted to market participants covered by the rule. Such market participants will not be required to...

HOUSEKEEPING, REMINDERS AND UPDATES NOVEMBER 2015

COMMODITY FUTURES TRADING COMMISSION Form CPO-PQR and FORM CTA-PR Frequently Asked Questions On November 5, 2015, the Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealers and Intermediary Oversight (“DSIO”) published a Frequently Asked Questions (“FAQs”) regarding Form CPO-PQR (“Form PQR”) and Form CTA-PR (“Form PR”). Generally, the Form PQR is a quarterly report filed by commodity pool operators (“CPOs”) and the Form PR is a quarterly report filed by commodity trading advisers (“CTAs”). The DSIO FAQs includes fifty-three (53) questions regarding Form PQR and twelve (12) questions pertaining to Form PR. The purpose of the FAQs was for the DSIO to address technical issues, filing requirements, reporting thresholds, the different schedules of the Form PQR, specific questions on the Form PR, and report deadlines. The complete FAQs are available online. The DSIO will update the FAQs on an as needed basis. NATIONAL FUTURES ASSOCIATION Form PQR and Form PR...

NFA Announces 2015 Nominations

NFA's Articles of Incorporation were amended to reduce the size of NFA's Board of Directors from 37 to 29 Directors. The new Board structure will be in place in February 2016, and all current Directors' terms expire at the Board's regular Annual Meeting on February 18, 2016. In accordance with NFA Bylaw 406, the Office of the Secretary has received from the 2015 Nominating Committee a list of its nominees for positions on NFA's Board of Directors and 2016 Nominating Committee. The terms of the new Member Director positions have been staggered as determined by the respective Subcommittees of the Nominating Committee. The list of nominees included with this Notice shall serve as notification to NFA Members of the candidates proposed by the 2015 Nominating Committee. Other nominations may be made by petition. Article VII, Section 3 of NFA's Articles of Incorporation provides that: (b) Petition Procedure. "Nominations may be...

Housekeeping, Reminders and Updates

NATIONAL FUTURES ASSOCIATION Information Systems Security Programs - Cybersecurity On October 23rd the National Futures Association (“NFA”) announced the adoption of the interpretive notice regarding NFA Compliance Rules 2-9, 2-36 and 2-49. The purpose of the interpretive notice was to address information systems security programs – cybersecurity. The interpretive notice entitled Information Systems Security Programs (“Cybersecurity Interpretive Notice”) was recently approved by the Commodity Futures Trading Commission (“CFTC”). The Cybersecurity Interpretive Notice requires Member firms to adopt and enforce written policies and procedures to secure customer data and access to their electronic systems. The terms of the Interpretive Notice become effective March 1, 2016, for all NFA Members. As noted in the October 23rd Notice the Members, the NFA stated that the purpose of the Cybersecurity Interpretive Notice was adopt a principles-based risk approach that would provide flexibility for Member firms to develop a bespoke information systems security program (“ISSP”)...

Chairman's Letter

Dear Members: Lately I've been reading a lot about the "vanishing FCM." In the July issue of our newsletter, Marc Nagel wrote an excellent article on the subject. And Ginger Szala wrote an equally thoughtful piece for CTA Intelligence a few months ago. NFA records list 62 FCMs registered in late July of this year. Contrast that number with 189 registered in 2004, 130 in 2008 and 82 registered FCMs as recently as mid-2013. The rising costs of compliance and FCM capital charge changes are most often cited as the main reasons for the declining numbers. Interest income on deposits, a once reliable revenue source for firms, has not been available for several years. All this seems to be a bit of bad news, but is it really so bad for NIBA members? Even in the heyday of FCMs, only a few worked with IBs and their customers, or supported...

Housekeeping, Reminders, and Updates

Financial Industry Regulatory Authority Redesigned FINRA Website In March, the Financial Industry Regulatory Authority (“FINRA”) announced the launch of its newly redesigned website. Two key factors were the driving force behind the updates to the website: improve the user-experience of BrokerCheck and creating a more mobile-friendly interface to address the increase traffic to the website from mobile devices. The launch of the website was announced in a March 16th press release. The press release included a quote from FINRA Chairman and Chief Executive Officer, Richard Ketchum in which he states that the new website “demonstrates our commitment to providing a more engaging experience for users to more easily find the tools and resources they need such as BrokerCheck, investor education and important information about registration and qualification exams. It features a simpler navigation and an intuitive design with the goal of making our website a best-in-class, primary destination for all...

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