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Notice I-17-08

February 23, 2017

CFTC amends Part 4 regulations regarding CPO financial reports

The CFTC amended certain of its Part 4 regulations relating to commodity pool operators (CPO) and their financial reporting obligations. These amendments permit the use of specified additional alternative generally accepted accounting principles, standards or practices (Additional Alternative GAAP); and provide relief from the Annual Report audit requirement under certain circumstances. The CFTC's amendments became effective on December 27, 2016. This Notice provides instructions regarding how CPOs can file with NFA the notices that are required in order for CPOs to avail themselves of any of this relief. For complete information on the CFTC requirements, see CFTC Regulation 4.22.

This Notice also discusses recent enhancements to NFA's EasyFile Extensions and Notice Filings system, which will now allow CPOs to make one filing that will cover one or more pools.

NFA notification by CPOs of the use of Additional Alternative GAAP

CFTC regulations now permit, in certain circumstances, non-U.S. pools to use Additional Alternative GAAP in the presentation and computation of Annual Reports, periodic Account Statements, and/or Pool Quarterly Reports.

To claim the Additional Alternative GAAP relief available under CFTC Regulation 4.22, a CPO must file the 4.22(d)(2) pool exemption with NFA using NFA's Electronic Exemption System within 90 calendar days after the end of the pool's first fiscal year. Detailed instructions on how to file this exemption can be found in NFA's Electronic Exemption System.

NFA notification by CPOs of Annual Report audit requirement relief due to stub period

CFTC regulations now permit a CPO to provide an unaudited Annual Report for a pool's first fiscal year, if the following criteria are met:

  • Time from which the CPO first receives funds, securities or other property from a participant in the pool, to the pool's first fiscal-year end is four months or less (stub period);
  • Throughout the stub period, the pool had no more than 15 participants and their aggregate gross capital contributions to the pool did not exceed $3 million, not including participants who are listed in CFTC Regulation 4.22(g)(2)(ii)(A)(1)-(5);
  • A waiver of the right to timely receive an audited Annual Report for the pool's first fiscal year is obtained from each participant other than the pool operator, the pool's commodity trading advisor, any person controlling, controlled by, or under common control with the pool operator or trading advisor, or any principal of the before mentioned;
  • A notice containing the information required in CFTC Regulation 4.22(g)(2)(ii)(C)(2) is filed with NFA prior to the date the CPO is required to distribute and submit the Annual Report for the pool's first fiscal year; and
  • The next Annual Report for the pool is audited and covers the stub period plus the pool's first 12-month fiscal year.

Instructions on how CPOs should notify NFA of the relief from the Annual Report audit requirement due to the stub period are available on the sign in page of NFA's EasyFile Extensions and Notice Filings System.

NFA notification by CPOs of Annual Report audit requirement relief due to pool participants only being insiders

CFTC regulations now permit a CPO to provide an unaudited pool Annual Report if, during any fiscal year, the pool only had insiders as participants. For purposes of this relief, insiders are one or more of the pool operator(s), the pool's commodity trading advisor, any person controlling, controlled by, or under common control with the pool operator or trading advisor, and any principal of the foregoing. To claim this relief, the CPO must obtain a written waiver from each insider pool participant of their right to receive an audited Annual Report. To notify NFA that the CPO is taking advantage of this relief, when filing the pool's Annual Report with NFA, the CPO must check box 5018.

Enhancements to NFA's EasyFile Extensions and Notice Filings system

NFA recently enhanced its EasyFile Extensions and Notice Filings system to allow CPOs to include multiple pools when filing a notice. Please note that this system can be used to file the following notices:

  • 1.16(g), Replacement of Pool's CPA
  • 4.22(f)(1), Request for up to 90 days to file an Annual Report
  • 4.22(f)(2), Request for up to 90 days to file an Annual Report for a Fund of Funds
  • 4.22(g), Change in Pool's Fiscal Year End
  • 4.22(g)(2)(ii), Stub Period Relief

Although each notice can include multiple pools, CPOs can only select one rule reference for each notice. In addition, CPOs can only file one notice for each ending date—if filing multiple notices in one day, each notice must have a distinct ending date.

If you have questions regarding this Notice, please contact Christine Roche, Senior Manager, Compliance, (croche@nfa.futures.org or 312-781-1562) or Tracey Hunt, Associate Director, Compliance, (thunt@nfa.futures.org or 312-781-1284).

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