NFA Issues Guidance on Reaffirmation of CPO/CTA Exemptions


Introduction -

Earlier this year, the Commodity Futures Trading Commission (“CFTC”) promulgated amendments to its regulations governing commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) that now require, among other conditions, any person that claims an exclusion from the CPO definition under CFTC Regulation 4.5, an exemption from CPO registration under CFTC Regulation 4.13, or an exemption from CTA registration under CFTC Regulation 4.14(a)(8), to annually reaffirm the applicable notice of exclusion or exemption within 60 days of the calendar year end. Accordingly, any such notice on file as of December 31, 2012, must be reaffirmed by March 1, 2013. Failure to do so will be deemed to be a request to withdraw the exemption or exclusion and, therefore, will result in the automatic withdrawal of the exemption or exclusion on March 1, 2013.

When the CFTC added the reaffirmation requirement, it also reimposed commodity interest trading limits for registered investment companies under Regulation 4.5 and, in accordance with the Dodd-Frank Act, included most swaps in the definition of commodity interests for purposes of that regulation and Regulation 4.13. The CFTC also rescinded the CPO registration exemption for private fund operators under Regulation 4.13(a)(4), so CTAs that had been advising such pools may no longer claim exemption under Regulation 4.14(a)(8) on that basis. Persons that have previously filed notices claiming exemptions from registration must therefore review their operations in light of these regulatory amendments to determine if they may reaffirm the notices.

Reaffirming Relief -

The National Futures Association (“NFA”), which the CFTC has authorized to process applications for registration and claims for exemption, has now issued guidance regarding the reaffirmation process. Persons with exemption notices on file may now access NFA’s Exemption System at to complete the reaffirmation process. It is important to note that, while CTA exemption may be claimed at the firm level only, CPO exemptions must be claimed on a pool-by-pool basis.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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