CPO and CTA Disclosure Documents FAQs
No. A registered CPO that is required to provide a disclosure document must file it with NFA, but some exemptions may apply. If a disclosure document is required, it cannot be used until it is reviewed and accepted by NFA.
A qualified eligible person (QEP) is a sophisticated person who participates in a commodity pool or opens a managed account. The categories of persons who qualify as QEPs are listed in CFTC Regulation 4.7(a).
If the CPO is soliciting new pool participants or the CPO is soliciting more customers, the pool disclosure document must be updated at least every 12 months. However, a CPO or CTA may be required to update the disclosure document more often if there are any material changes that must be disclosed.
Review times vary depending on whether it is an initial or updated filing, the disclosure document size, and other factors. In general, NFA reviews most disclosure documents within 14 days of receipt.
If certain conditions are met, a disclosure document may be eligible for instant filing treatment. A disclosure document that qualifies for instant filing treatment is generally reviewed within three business days. NFA staff will respond to a Member via email with either a comment letter or an acceptance letter. Review the CFTC's Instant Filing Notice for further guidance.
A disclosure document may be eligible for instant filing treatment if:
- A previously accepted disclosure document is on file with NFA;
- The disclosure document contains no material changes; and
- The firm requests Instant Filing treatment.
Review the CFTC's Instant Filing Notice for further guidance.
NFA Rules and CFTC Regulations do not prohibit CPOs from including pool disclosure documents on their websites. However, if a privately offered commodity pool is exempt from SEC Registration, the CPO should check with the SEC to ensure that this would not violate the exemption.
Although the Member is not required to provide the CTA disclosure document on its website, the CTA disclosure document does provide a potential client with a general overview of the firm's business and the risks involved with the CTA's trading program.
A pool disclosure document can only include information required by CFTC, SEC and state authorities. Any other information the CPO wants to provide must be included in a Statement of Additional Information. Review NFA Compliance Rule 2-35 and Interpretive Notice 9035 for specific guidance on preparing an SAI.
In general, pool disclosure documents should be no more than 30 pages long, be written in easy to understand language, and avoid the use of legal jargon when possible. Pool disclosure documents that are more complex may be slightly longer. Review Interpretive Notice 9035 and NFA's Disclosure Document Guide for more guidance.
An account is notionally funded when the client directs the CTA to trade the account as if the funding amount was higher than the actual funds on deposit in the client's account. This does not, however, mean that the account may trade undermargined. Notional funding is allowed as long as certain criteria are met, including having a written agreement in place between the firm and the client. Review NFA Compliance Rule 2-34 and the Interpretive Notice 9054 for more guidance.