Notices to Members

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Notice I-21-08

February 08, 2021

Educational resources, common deficiencies and other important regulatory information for CPO and CTA Members

NFA is committed to providing its Members with the resources they need to meet their regulatory obligations as efficiently as possible. This Notice covers educational resources, common deficiencies and links to Notices to Members regarding recent amendments to NFA Rules and Interpretive Notices.

Members Section of NFA's Website

From the Members section of NFA's website, Members can access information detailing their regulatory obligations including the following:

Commodity Pool Operators (CPO)

Commodity Trading Advisors (CTA)

COVID-19/Coronavirus Update

Visit NFA's COVID-19 page for guidance, current relief and updates related to the ongoing pandemic.

Virtual Member Education

NFA will hold a virtual Member regulatory workshop in spring 2021. The workshop agenda will cover examinations and recent rulemaking initiatives, among other topics. More information will be distributed shortly.

Regulatory Obligations Related to Common Deficiencies

The following section describes a number of regulatory obligations related to common deficiencies noted during NFA examinations of Member CPOs and CTAs.

Cybersecurity

CPO and CTA Members must adopt a written information systems security program (ISSP) pursuant to Interpretive Notice 9070 to address the risk of unauthorized access to or attack of their information technology systems and to respond appropriately should unauthorized attacks occur. Members are also required to notify NFA of certain cybersecurity incidents related to their commodity interest activities via NFA's Cyber Notice Filing System. One common deficiency in this area is failure to provide cybersecurity training to employees upon hiring and annually thereafter.

Members that fail to establish and implement an ISSP may be subject to disciplinary action.

Self-Examination Questionnaire

NFA Members must annually review their operations using NFA's Self-Examination Questionnaire. This questionnaire is designed to aid Members in recognizing potential problem areas and to alert them to procedures that must be revised or strengthened.

Pool Financial Reporting—Notification Requirements

Changes in Fiscal Year End: If a CPO elects a fiscal year end other than the calendar year end for a pool, it must give written notice of the election to all participants and file notice with NFA via EasyFile pursuant to CFTC Regulation 4.22(g) within 90 calendar days after the pool's formation. If this notice is not given, the CPO will be deemed to have elected the calendar year end as the pool's fiscal year end. The CPO must continue to use the elected fiscal year end for the pool unless it provides written notice of any proposed change to all participants and files such notice with NFA via EasyFile at least 90 days before the change.

Changes in Certified Public Accountant (CPA): In the event that a CPO changes the independent CPA engaged to audit a pool's financial statements, the CPO must file notice with NFA via EasyFile pursuant to CFTC Regulation 1.16(g) no more than 15 days after the CPA's resignation or dismissal by the CPO.

Extension Requests: If a CPO requests an extension to file an annual pool financial statement, the extension must be filed with NFA via EasyFile prior to the due date of the filing.

Cessation of Trading: When a pool ceases trading, the CPO must promptly update the Annual Questionnaire. With few exceptions, a CPO must also distribute to participants a final Annual Report and file the Annual Report with NFA. This Annual Report is due within 90 days after the pool ceases trading, absent an extension.

Calculation of Financial Ratios

CPO and CTA Members must compute financial ratios using the accrual method of accounting and in accordance with U.S. generally accepted accounting principles or another internationally recognized accounting standard as outlined in Interpretive Notice 9071. Members should consult Notice I-18-20 for additional guidance on calculating these ratios.

Recent Amendments and Reminders

The following links contain Notices to Members regarding reminders and recent amendments to NFA Rules and Interpretive Notices.

I-20-44: CPO Members—Changes to the NFA Form PQR

I-20-26: Effective date for NFA rule amendments related to NFA's penalties and other disciplinary procedures

I-20-21: Increase in Fraudulent Phishing Emails Warrants Member Vigilance

I-20-18: CTA Members: Amendments to NFA Compliance Rule 2-29 and related Interpretive Notice now effective

I-20-09: Relief from CTA-PR filing requirement for CTAs that solely direct trading of pools for which the firm operates as a registered or exempt CPO

Contact NFA

If you need assistance with any NFA requirements, please contact NFA's Information Center (312-781-1410 or 800-621-3570 or information@nfa.futures.org).

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