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December 01, 2015
Guidance on the annual affirmation requirement for entities currently operating under an exemption or exclusion from CPO or CTA registration
The CFTC requires any person or entity claiming an exemption or exclusion from CPO registration under CFTC Regulation 4.5, 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) or an exemption from CTA registration under 4.14(a)(8) to annually affirm the applicable notice of exemption or exclusion within 60 days of the calendar year end, which is February 29, 2016, for this affirmation cycle.
Failure to affirm an active exemption or exclusion from CPO or CTA registration will result in the exemption or exclusion being withdrawn on March 1, 2016. For registered CPOs or CTAs, withdrawal of the exemption or exclusion will result in the entity being subject to Part 4 Requirements regardless of whether the entity otherwise remains eligible for the exemption or exclusion. For non-registrants, the withdrawal of the exemption or exclusion may subject the person or entity to enforcement action by the CFTC.
How to complete the affirmation process
Starting today, any person or entity claiming an exemption or exclusion under CFTC Regulation 4.5, 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) or 4.14(a)(8) will be able to complete the affirmation process by accessing NFA's Exemption System through the Electronic Filings tab.
Once an authorized user is logged into the system, that individual will be directed to the Exemption Index, which lists all firm level (at the top) and pool level (at the bottom) exemptions or exclusions on file with NFA. Exemptions or exclusions 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 or exclusion continues to be effective. By clicking 'OK', the current date will replace the 'Affirm' icon and complete the affirmation requirement for the given exemption or exclusion for the year. The same process must be completed for every exemption or exclusion on file that requires affirmation.
Frequently Asked Questions for Exemptions
How often will I need to affirm my exemptions?
You will need to affirm each applicable exemption or exclusion 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 Exemption System. 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 Exemption System. If the contact information changes during the year, firms should promptly update this information.
What if NFA records reflect an exemption or exclusion for an inactive pool?
A registered CPO can update NFA's records with the applicable information. The CPO must first withdraw the exemption or exclusion by accessing NFA's Exemption System. At the time you withdraw the exemption or exclusion, you will be directed to the Annual Questionnaire to delete the pool or indicate the pool has ceased operations.
A non-registered entity must send a written notification 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.
If I can no longer qualify for an exemption or exclusion from CPO or CTA registration, what should I do?
If you do not affirm the applicable exemption or exclusion by February 29, 2016, it will be automatically withdrawn. As a result, in order to continue to operate a pool or direct client accounts, you 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 video tutorials available online.
How will the firms with which I do business know that I have completed the affirmation process?
Once an entity affirms the applicable exemptions or exclusions, NFA's BASIC system will reflect the affirmation date for each exemption or exclusion held. If the exemption or exclusion is not affirmed by February 29, 2016, BASIC will also reflect a withdrawal date for the exemption or exclusion.
If I currently conduct business with an exempt CPO or CTA, how do I ensure that these entities have properly affirmed their exemptions or exclusions in order to satisfy my Bylaw 1101 requirements?
BASIC will reflect whether an exemption or exclusion 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 or exclusion that was not affirmed. Members can also access a spreadsheet that includes a list of all persons or entities that have exemptions or exclusions 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) or exclusion(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 February 29, 2016, the exemption or exclusion has not yet been affirmed. Once the exemption or exclusion has been affirmed, the affirmation due date will change to March 1, 2017.
If I file a new exemption during the affirmation period (December 1, 2015 - February 29, 2016), will I also need to affirm that exemption for 2015?
Any exemptions or exclusions filed during the affirmation period will not need to be affirmed until 60 days after December 31, 2016.
Any questions regarding these processes should be directed to Brian Dempsey, Senior Analyst II, Compliance (email@example.com or 312-781-1228) or Kristen Harkins, Manager, Compliance (firstname.lastname@example.org or 212-513-6016).