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Notice I-21-15

April 13, 2021

Effective date for NFA rules establishing CPO notice filing requirements

NFA recently adopted Compliance Rule 2-50 and a related Interpretive Notice entitled Compliance Rule 2-50: CPO Notice Filing Requirements, which require commodity pool operator (CPO) Members to file notice with NFA when a market or other event affects a commodity pool's ability to fulfill its participant obligations. This rule and Interpretive Notice will become effective on June 30, 2021.

Similar to NFA notification requirements already in place for futures commission merchant and introducing broker Members, Compliance Rule 2-50 and its related Interpretive Notice are intended to provide NFA with important information about CPO Members and the pools they operate without being unduly burdensome. This rule is designed to ensure that CPO Members timely notify NFA of potential financial issues that may impact a CPO's ability to fulfill its obligations to pool participants or which may result in a pool's unplanned liquidation. Compliance Rule 2-50 requires a CPO Member to promptly notify NFA if it:

  • Operates a pool that cannot meet its margin call(s);
  • Operates a pool that is unable to satisfy redemption requests in accordance with its subscription agreements;
  • Operates a pool that has halted redemptions (not related to existing gates or lockups, or a pre-planned cessation of operations); or
  • Receives notice from a swap counterparty that a pool it operates is in default.

The related Interpretive Notice further defines each of the notification events identified in Compliance Rule 2-50 and provides guidance on events that do not trigger the requirement.

NFA will provide additional instructions regarding the form and manner of CPO notice filings prior to the effective date. Additionally, NFA will cover these requirements during forthcoming educational programs.

NFA's CPO/CTA Advisory Committee supported the adoption of NFA Compliance Rule 2-50 and the related Interpretive Notice, which were unanimously approved by the Board.

More information on the rule and Interpretive Notice can be found in NFA's March 5, 2021 submission letter to the CFTC. If you have any questions, please contact Tracey Hunt, Director, Compliance (thunt@nfa.futures.org or 312-781-1284) or Mary McHenry, Director, Compliance (mmchenry@nfa.futures.org or 312-781-1420).

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