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December 01, 2017
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, 2018, for this affirmation cycle.
Failure to affirm an active exemption from CPO or CTA registration will result in the exemption being withdrawn on March 2, 2018. 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.
How to complete the affirmation process
Starting today, any person or entity claiming an exemption 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 section of NFA's website.
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 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 same process must be completed for every exemption on file that requires affirmation.
Frequently Asked Questions for Exemptions
1. How often will 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 Exemption System and the firm's Enforcement Compliance 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 Exemption System. If the contact information changes during the year, firms should promptly update this information.
2. 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 Exemption System. At the time you withdraw the exemption, 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 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.
3. If I can no longer qualify for an exemption from CPO or CTA registration, what should I do?
If you do not affirm the applicable exemption by March 1, 2018, 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 educational resources available online.
4. 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, 2018, BASIC will also reflect a withdrawal date for the exemption on March 2, 2018.
5. 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, 2018, the exemption has not yet been affirmed. Once the exemption has been affirmed, the affirmation due date will change to March 1, 2019.
6. If I file a new exemption during the affirmation period (December 1, 2017 - March 1, 2018), will I also need to affirm that exemption for 2017?
Any exemptions filed during the affirmation period will not need to be affirmed until 60 days after December 31, 2018.
Any questions regarding this Notice should be directed to Brian Dempsey, Manager, Compliance (email@example.com or 312-781-1228) or Kaitlan Chi, Manager, Compliance (firstname.lastname@example.org or 312-781-1219).