NFA Issues Notice Regarding CPO Delegation (Notice I-15-13)

The NFA issued a notice to members requiring CPOs to answer a question concerning delegation of certain responsibilities to another registered CPO, when they file a pool’s annual financial statement in the NFA’s EasyFile system. Due to the self-executing relief in CFTC No-Action Letters 14-69 and 14-126, a commodity pool operator (“CPO”) does not notify the NFA when delegating certain responsibilities to another registered CPO. For that reason, the NFA is unable to provide this information on its BASIC system. The new requirement corrects that deficiency.

The new requirement will allow NFA Members conducting NFA Bylaw 1101 due diligence on a particular pool to be able to confirm through the NFA’s BASIC system that the CPO of a particular pool is an NFA Member or exempt from such requirement.

In order to notify the NFA that investment management authority over a particular pool was delegated to a CPO, and to ensure that the NFA’s systems reflect the delegation, CPOs are now required to answer a question concerning delegation when they file a pool’s annual financial statement in the NFA’s EasyFile system.

Lofchie Comment: The requirements of NFA Bylaw 1101 are worth reconsidering. There may be no other regulatory certification that demands so much effort and work to be done and redone year after year. From a cost/benefit perspective, it is questionable whether these requirements represent a good use of a firm’s compliance dollars.

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