NFA Proposes Amendment Permitting Certain Loans by Commodity Pools to Related Entities

On March 4, the National Futures Association (NFA) issued a proposed rule change and interpretive notice that would allow commodity pools to provide certain loans to related commodity pool operators (CPOs) and other affiliates. Pursuant to NFA Rule 2-45, commodity pools are prohibited from directly or indirectly loaning or advancing pool assets to the pool’s CPO or other related parties. The proposed amendment clarifies that commodity pools operated by a registered CPO are permitted, subject to certain conditions set out in the related interpretive notice, to: (i) borrow securities from, or loan securities to, an affiliated pool to fulfill short sale borrowing and locate requirements; (ii) loan securities to an affiliate for cash financing purposes; (iii) guarantee the obligations of a subsidiary or affiliate in which the pool has a debt or equity investment; (iv) enter into repurchase or reverse repurchase agreements with affiliated pools; (v) make tax-related distributions to the CPO or a related party; and (vi) if the pool is a registered investment company or business development company, engage in certain loans or advances of fund assets permitted by the Investment Company Act and certain rules, orders or no-action letters issued thereunder. The NFA is issuing this amendment and guidance to accommodate CPOs that were previously exempt from registration. Unless the Commodity Futures Trading Commission notifies the NFA that it intends to formally review the amendment, the amendment will become effective after ten days.

For more information, click here.

 


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.

© Katten Muchin Rosenman LLP | Attorney Advertising

Written by:

more+
less-

Katten Muchin Rosenman LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×