The CFTC requires any CPO claiming one of these exemptions: Regulation 4.13(a)(1), (a)(2), (a)(3), and (a)(5), an exclusion under Reg. 4.5 or exemption from CTA registration under 4.14(a)(8) to annually affirm the notice of exemption within 60 days of calendar year end (not fiscal year end). All CPOs and CTAs claiming afore mentioned exemptions must file an affirmation notice by March 1, 2021. Failure to file the exemption affirmation will be deemed to have requested withdrawal of exemption and therefore, may be required to become registered NFA Members.
NFA has since recognized that it may be challenging for members to conclusively determine prior to that date whether a previous CTA/CPO exemption is still eligible to continue.
Therefore, CPOs and CTAs that take reasonable steps to determine the registration and membership status of previous exempt persons will not be in violation of NFA Bylaw 1101 or Compliance Rule 2-36(d) if between January 1 and March 31, 2021 they transact customer business with a previously exempt person that fails to become registered and an NFA member, file a notice affirming its exemption from CPO/CTA registration, or provide a written representation as to why the person is not required to register or file the notice affirming the exemption.
Members should compare their list of exempt CPO/CTAs with which the Member transacts customer business to the information NFA makes available to assist Members in determining whether an exempt CPO/CTA has affirmed its exemptions.
Members can review exemption information in two ways. members can view individual persons or entities by navigating to NFA Basic System, opening the person or entity’s record, and clicking “View All” in the Firm’s Exemptions box or on the Pools & Pool Exemptions box. The pages should reflect an affirmation date if the exempt person or entity has properly filed a notice affirming an exemption or a withdrawal date if the person or entity has withdrawn the exemption.
Additionally, members can access a spreadsheet that includes a list of all persons or entities with exemptions on file with NFA that must be affirmed on an annual basis. This can be found in the Member’s Annual Questionnaire when logged into the NFA’s System.
If the affirmation due date remains March 1, 2021 the exemption has NOT yet been affirmed. Once affirmed, the due date will change to March 1, 2022.
If a member has been transaction customer business with a person that had previously claimed an exemption from CPO/CTA registration, that has not yet filed a notice in NFA’s Exemption System, and is not properly registered and becomes an NFA Member by December 31, 2020, you must contact that person to see if they intend to file the affirmation notice with NFA. If they do not intend to file the affirmation notice by March 1, 2021, the the Member must promptly obtain written representation as to why the person is not required to register or file a notice of exemption and then evaluate whether the notice is adequate. If it is determined to be inadequate, the member must put a plan in place to cease transacting customer business with the person.
If you have any questions regarding the affirmation and exemption from registration from NFA, please call Mike at 630-461-5841 or email Mike@cogcpa.com.