The NFA provided guidance on annual affirmation obligations for commodity pool operators ("CPOs") / commodity trading advisors ("CTAs") that are exempt from CFTC registration.

In its Notice, the NFA stated that the CFTC requires any person who claims an exemption from CPO registration, an exclusion from CPO registration, or an exemption from CTA registration to annually affirm the applicable notice of exemption within 60 days of the calendar year-end. A failure to file the affirmation notice by March 2, 2020 will result in (i) being treated as the equivalent of a request to withdraw the relevant exemption and (ii) possibly being required to register as an NFA member.

The NFA urged members to take "reasonable steps to determine the registration and membership status of these previously exempt persons." The NFA said that if members take such steps, they "will not be in violation of NFA Bylaw 1101 or Compliance Rule 2-36(d) if, between January 1 and April 1, 2020, they transact customer business with a previously exempt person that fails to become registered and an NFA Member, 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." The NFA also outlined certain steps that members can take "to identify whether an exempt CPO/CTA has affirmed its exemption," and described the "expectations for members transacting customer business with an exempt CPO/CTA that has not affirmed its exemption."

Primary Sources

1 NFA Notice I-20-02: Member Obligations under NFA Bylaw 1101 and Compliance Rule 2-36(d) with Respect to CPOs/CTAs Exempt from Registration

2 NFA Annual Questionnaire

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