[co-author: Lizet Steele]
Persons claiming exemptions from registration as a commodity pool operator (CPO) or a commodity trading advisor (CTA) must affirm their exemptions by March 1, 2018. Pursuant to Commodity Futures Trading Commission (CFTC) regulations, persons claiming (i) an exemption from registration as a CPO under CFTC Regulations 4.13(a)(1), 4.13(a)(2), 4.13(a)(3) or 4.13(a)(5); (ii) an exclusion from CPO registration under CFTC Regulation 4.5; or (iii) an exemption from CTA registration under CFTC Regulation 4.14(a)(8) must annually affirm their eligibility for the exemption within 60 days of the calendar year end.1 If a person who qualifies for an exemption and/or exclusion fails to affirm such eligibility by March 1, 2018, any applicable exemption or exclusion is automatically withdrawn.2 As a result, a person’s failure to timely affirm eligibility for an exemption or exclusion subjects that person to the requirements of Part 4 of the CFTC Regulations, regardless of whether that person remains eligible for the exemption and/or exclusion.
Commodity pool operators are persons engaged in the business of managing a collective investment vehicle that trades commodity interests, i.e., futures, options and swaps.3 Commodity trading advisors are persons who, for compensation or profit, advise others on the value of commodity interests or the advisability of trading in commodity interests.4 CFTC Regulations 4.5, 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) and 4.14(a)(8) exempt or exclude certain persons from the definitions of CPO and CTA.
CFTC Regulation 4.5 makes available an exclusion from CPO registration for certain persons who are regulated by another regulatory authority, e.g., for advisers to registered investment companies meeting certain de minimis derivatives trading criteria and insurance companies with respect to their separate accounts.5 Persons who, broadly speaking, operate small pools, and pools that have a de minimis level of futures activity or that restrict participation to sophisticated persons may be eligible for an exemption pursuant to CFTC Regulation 4.13.6 Under CFTC Regulation 4.14(a)(8), a CTA may be eligible for an exemption from CTA registration if it, among other requirements, only provides advice to pools operating under the CFTC Regulation 4.13(a)(3) exemption or provides advice as a registered investment adviser of pools that are exempt pursuant to CFTC Regulation 4.5.7
Affected persons may complete the annual affirmation via the National Futures Association’s (NFA) Exemptions Filing System.
1 17 CFR § 4.5(c)(5); 17 CFR § 4.13(b)(4); 17 CFR § 4.14(a)(8)(iii)(D).
2 17 CFR § 4.5(c)(5); 17 CFR § 4.13(b)(4); 17 CFR § 4.14(a)(8)(iii)(D).
3 17 CFR § 1.3.
4 17 CFR § 1.3.
5 17 CFR § 4.5.
6 17 CFR § 4.13.
7 17 CFR § 4.14(a)(8).
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