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Notice I-13-36

November 18, 2013

Important Request for CPOs that Operate Registered Investment Companies Utilizing Wholly Owned Subsidiaries (Known as Controlled Foreign Corporations)

THIS NOTICE DOES NOT APPLY TO WHOLLY OWNED SUBSIDIARIES OF POOLS THAT ARE NOT REGISTERED INVESTMENT COMPANIES. IF YOU DO NOT CURRENTLY OPERATE ANY POOLS THAT ARE REGISTERED INVESTMENT COMPANIES WITH ONE OR MORE WHOLLY OWNED SUBSIDIARIES, YOU DO NOT NEED TO TAKE ANY FURTHER ACTION.

On September 5, 2013, the Commodity Futures Trading Commission (CFTC) issued No-Action Letter 13-51, which provides relief from certain reporting obligations under Part 4 of CFTC Regulations to certain wholly owned subsidiaries of registered investment companies (RICs). Specifically, the No-Action Letter permits CPOs of RICs that trade commodity interests through wholly owned subsidiaries (known as controlled foreign corporations or CFCs) to report for the RIC and the CFC on a consolidated basis when complying with financial reporting requirements under CFTC Regulations 4.22(c) and 4.27(c). Relief under this notice is not self-executing. CPOs of RICs that are eligible for this relief must file a notice of claim with the CFTC following the procedures set forth in the No-Action Letter.

In order to ensure that NFA's records are accurate for determining annual financial reporting requirements under CFTC Regulation 4.22(c) and 4.27(c), NFA is requiring any CPO that has filed a claim of notice under CFTC No-Action Letter 13-51 to notify NFA of the notice filing on or before December 31, 2013. Failure to notify NFA will result in your firm receiving calls for financial reports that may not be necessary. In order to complete the notification process with NFA, you must first ensure that the RIC and its related CFC(s) have been properly identified through the Annual Questionnaire available on NFA's website. Please see the attached instructions with screenshots for identifying pools as a CFC of a RIC.

Once all RICs and related CFCs are properly identified in the Annual Questionnaire, you must notify NFA of your 13-51 No-Action claim notice by accessing the Exemption System available on NFA's website. Please follow these instructions:

  1. Open the Exemption system using this link: http://www.nfa.futures.org/NFA-electronic-filings/exemptions.HTML.
  2. Enter your ORS ID and password to logon; you can then select the applicable CFC by clicking on the pool ID.
  3. From the "Pool/Exemption Management" screen, click on the drop down menu under "File Pool Exemption" and select 13-51 CFTC No-Action. If you do not see the 13-51 CFTC No-Action option for a pool, you should ensure that you properly identified the pool as a CFC of a RIC in the Annual Questionnaire. (See above.)
  4. A template will be generated and you will be required to upload a PDF of the no-action letter that was filed with the CFTC.
  5. Once the letter is uploaded, you can click the "Submit" button at the bottom of the screen and you should now see the Exemption for that pool.

Completing the above steps through the Exemption System will allow NFA to timely update its records and will eliminate unnecessary follow up on financial statement calls. If you have any questions, please do not hesitate to contact Tracey Hunt, Associate Director, Compliance (thunt@nfa.futures.org or 312-781-1284) or Mary McHenry, Associate Director, Compliance (mmchenry@nfa.futures.org or 312-781-1420).

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