Notices to Members

Notice I-20-43

December 1, 2020

Guidance on the annual affirmation requirement for entities currently operating under an exemption from CPO or CTA registration

The CFTC requires any person that claims an exemption from CPO registration under CFTC Regulation 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5), an exclusion from CPO registration under CFTC Regulation 4.5 or an exemption from CTA registration under 4.14(a)(8) (collectively, exemption) to annually affirm the applicable notice of exemption within 60 days of the calendar year end, which is March 1, 2021 for this affirmation cycle.

Effective with this affirmation cycle, persons re-affirming an exemption under 4.13(a)(1), 4.13(a)(2), 4.13(a)(3) and 4.13(a)(5) will be required to attest that neither the person nor its principals has in its background any statutory disqualifications listed under Section 8a(2) of the Commodity Exchange Act.

Failure to affirm an active exemption from CPO or CTA registration will result in the exemption being withdrawn on March 2, 2021. For registered CPOs or CTAs, withdrawal of the exemption will result in the entity being subject to Part 4 Requirements regardless of whether the entity otherwise remains eligible for the exemption. For non-registrants, the withdrawal of the exemption may subject the person or entity to enforcement action by the CFTC, if either continues to operate without registration or exemption.

How to complete the affirmation process

To complete the affirmation process, access the Exemptions System from the Electronic Filing Systems page on NFA's website.

Once an authorized user is logged into the system, that individual will be directed to the Exemptions Index, which lists all firm level (at the top) and pool level (at the bottom) exemptions on file with NFA. Exemptions requiring affirmation will be identified with an icon in the "Affirm" column. After clicking on the icon, a pop-up box will appear requesting affirmation that the exemption continues to be effective. By clicking "OK," the current date will replace the "Affirm" icon and complete the affirmation requirement for the given exemption for the year.

The Exemptions System also allows users to simultaneously affirm multiple exemptions. To affirm multiple exemptions, click "AFFIRM ALL" below the Exemptions table.

To verify that all of the relevant exemptions have been affirmed, check that a date appears in the "Affirm" column next to the applicable firm or pool in NFA's Exemptions System, or visit BASIC. BASIC will reflect whether an exemption held by a particular CPO or CTA has been successfully affirmed by including an affirmation date. A withdrawal date will be reflected for any exemption that was not affirmed.

Frequently asked questions about exemptions

1. How can I recover my Exemptions System username and/or password?
   
   If you are an NFA Member, contact your firm's ORS Security Manager to recover your username or reset your password. If you are a non-registered entity, follow the instructions in the Exemptions System Easy Reference Guide. Any questions regarding Exemptions System usernames and/or passwords should be directed to NFA's Information Center (information@nfa.futures.org or 800-621-3570 or 312-781-1410).

2. How often do I need to affirm my exemptions?
   
   You will need to affirm each applicable exemption on an annual basis, within 60 days of December 31. NFA will provide an additional email reminder of the affirmation process as the affirmation deadline nears. The email reminder will be sent to the email contact on file in NFA's Exemptions System and the firm's Enforcement Compliance Communication contact. In order to ensure that your firm receives NFA's annual reminder, you must verify that a current email address has been provided in NFA's Exemptions System. If the contact information changes during the year, firms should promptly update this information.

3. What if NFA records reflect an exemption for an inactive pool?
   
   A registered CPO can update NFA's records with the applicable information. The CPO must first withdraw the exemption by accessing NFA's Exemptions System. At the time the exemption is withdrawn, the CPO's authorized user will be directed to the Annual Questionnaire to delete the pool or indicate the pool has ceased operations.
   
   A non-registered entity must send an email to exemptions@nfa.futures.org. The written notification should include the full name of the entity and the pool along with any identifying NFA ID number.

4. If I no longer qualify for an exemption from CPO or CTA registration, what should I do?
   
   If the applicable exemption is not affirmed by March 1, 2021, it will be automatically withdrawn. As a result, in order to continue to operate a pool or direct client accounts, the firm may be required to be registered as a CPO and/or CTA and be an NFA Member. An authorized user can apply for registration and NFA membership using NFA's Online Registration System (ORS), which is available on NFA's website. For assistance in the process, NFA has a number of educational resources available online.

5. How will the firms with which I do business know that I have completed the affirmation process?
   
   Once an entity affirms the applicable exemptions, NFA's BASIC system will reflect the affirmation date for each exemption held. If the exemption is not affirmed by March 1, 2021, BASIC will also reflect a withdrawal date for the exemption on March 2, 2021.

6. If I currently conduct business with an exempt CPO or CTA, how do I ensure that these entities have properly affirmed their exemptions in order to satisfy my Bylaw 1101 requirements?
   
   BASIC will reflect whether an exemption held by a particular CPO or CTA has been successfully affirmed by including an affirmation date. A withdrawal date will be reflected for any exemption that was not affirmed. Members can also access a spreadsheet that includes a list of all persons or entities that have exemptions on file with NFA that must be affirmed on an annual basis. This spreadsheet can be found in the Member's Annual Questionnaire. Once an authorized user is logged into the Annual Questionnaire, the individual will see a link to a spreadsheet that is updated nightly. The spreadsheet will include all entities with an exemption(s) that requires an annual affirmation, as well as the most recent affirmation date, if applicable, and the affirmation due date. If the affirmation due date is March 1, 2021, the exemption has not yet been affirmed. Once the exemption has been affirmed, the affirmation due date will change to March 1, 2022.

7. If I file a new exemption during the affirmation period (December 1, 2020 – March 1, 2021), will I also need to affirm that exemption for 2020?
   
   Any exemptions filed during the affirmation period will not need to be affirmed until the following year (60 days after December 31, 2021).

Any questions regarding this Notice should be directed to Jill Kaminsky, Senior Analyst II, Compliance (jkaminsky@nfa.futures.org or 312-781-1641) or Jeff Newmyer, Senior Analsyt II, Compliance (jnewmyer@nfa.futures.org or 312-781-1575).