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July 13, 2015
Important request for CPOs that operate commodity pools that are utilizing wholly-owned subsidiaries and wish to consolidate filings under CFTC Regulation 4.22 and/or 4.27
This Notice does not apply to wholly-owned subsidiaries of pools that are registered investment companies. See Notice I-13-36, if you currently operate any pools that are registered investment companies with one or more wholly-owned subsidiaries.
IF YOU DO NOT CURRENTLY OPERATE ANY POOLS THAT UTILIZE WHOLLY-OWNED SUBSIDIARIES, OR YOU DO NOT WISH TO CONSOLIDATE YOUR FILINGS, YOU DO NOT NEED TO TAKE ANY FURTHER ACTION.
On September 8, 2014, the Commodity Futures Trading Commission (CFTC) issued No-Action Letter 14-112, which provides relief from certain reporting obligations under Part 4 of CFTC Regulations to certain wholly-owned subsidiaries of commodity funds. Specifically, the No-Action Letter permits a CPO of a parent commodity pool ("parent pool") that is not registered as an investment company under the Investment Company Act of 1940 that uses a wholly-owned subsidiary to trade in commodity interests to file reports for the subsidiary 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 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 Regulations 4.22(c) and 4.27(c), NFA is requiring any CPO that has already filed a claim of notice under CFTC No-Action Letter 14-112 to notify NFA of the notice filing on or before July 31, 2015. 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 any parent pool and its wholly-owned subsidiary have been properly identified through the Annual Questionnaire available on NFA's website. Please see the attached instructions with screenshots for identifying pools as such.
Once all parent pools and related wholly-owned subsidiaries are properly identified in the Annual Questionnaire, you must notify NFA of each 14-112 No-Action claim notice by accessing the Exemption System available on NFA's website. Please follow these instructions:
- Open the Exemption system using this link: http://www.nfa.futures.org/NFA-electronic-filings/exemptions.HTML.
- Enter your ORS ID and password to log on; you can then select the applicable wholly-owned subsidiary by clicking on the pool ID.
- From the "Pool/Exemption Management" screen, click on the drop down menu under "File Pool Exemption" and select "14-112 No-Action PFS" (for the annual report) or "14-112 No-Action PQR" (for the quarterly report). If you are choosing to consolidate on both filings, you must file both exemptions separately.
- After you provide the date for which the firm filed the notice with the CFTC, you can click the "Submit" button at the bottom of the screen and you should now see the Exemption for that pool.
If you do not see either 14-112 No-Action option for a pool, you should ensure that you properly identified the pool as a wholly-owned subsidiary of the parent pool in the Annual Questionnaire (see above). Further, this same process should be followed for any future notices filed with the CFTC pursuant to CFTC No-Action Letter 14-112.
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 Mary McHenry, Associate Director, Compliance (email@example.com or 312-781-1420) or Tracey Hunt, Associate Director, Compliance (firstname.lastname@example.org or 312-781-1284).