Oct 22, 2012 | Uncategorized

October 2012 Industry Update Alert

Many recent regulatory changes have resulted in new rules as well as deadlines. Complicating the regulatory environment further, certain firms now need to be dually registered with SEC as well as the CFTC.

Previously Exempt CPO Deadline Looms

December 31, 2012 is the deadline for registration with the CFTC through NFA (National Futures Association) for those who were previously exempted Commodity Pool Operators (CPO) under the CFTC Regulation 4.13(a)(4).  Under that exemption, funds who only had QEP investors were not required to be registered with the CFTC.  As of January 1, 2013 those CPO’s operating funds that trade commodity interests now need to be registered and operate in accordance with part 4 of the CFTC regulation.  Note that CPOs that currently hold 4.13(a)(4) exemptions or 4.5 exclusion have the option of pre-registering now and deferring CPO registration until January 1, 2013.  This is a very respectable option offered by NFA.

 Swap Dealers and Major Swap Participants Now Require Registration

Due to the passage of Dodd-Frank, NFA’s Board of Directors voted to amend NFA’s Articles of Incorporation to approve the addition of Swap Dealers (SDs) and Major Swap Participant (MSPs) categories.  SDs and MSPs are required to submit an Introducing Broker application with NFA by December 31, 2012.

After registration, brokers will have until March 31, 2012 to file the required financial information with NFA.

Harmonization Under Dual CFTC/SEC Regulations for CPOs

The harmonization due to the amended CFTC Regulation 4.5 for CPOs who must now be dually register as an SEC RIC and CFTC CPO is currently in process.  There appears to be no definitive date in sight for these new regulations.  We will keep you informed of the progress.

Reaffirm Exemptions on an Annual Basis

Due to the recent rescinding of certain exemptions, any firm doing business with a previously exempt entity must now reaffirm that the entity still qualifies under the current exemption on an annual basis.

The firm has a 60 day grace period from year end, December 31, 2012, to contact those entities. This can be done with a negative confirmation.

Please keep any and all documentation on hand in case of a surprise NFA audit.  Failure to reaffirm the entities you are doing business with may result in disciplinary action and/or NFA fines.

Other Important Deadlines to Note

December 15, 2012

Form PF filing for investment advisers to private funds not already subject to filing requirements becomes effective. Form PF filing date varies, ranging from 15 days after end of fiscal quarter to 120 days after end of fiscal year, depending on the type of private funds advised and AUM.

July 1, 2013

FCMs must file “suspicious activity reports” and “currency transaction reports” and IBs must file “suspicious activity reports.”

Annual Certified Financial Audits, Annual AML Audits, and Other Reporting

Year end is less than 90 days away.  The following is a list of some of requirements you may need to remain in compliance during your fiscal year:

  • Annual Certified Financial Audit
  • Ethics Training
  • NFA Self Exam Questionnaire
  • Disaster Recovery Plan Testing
  • Annual Independent AML Audit
  • Renewal and Update to your Registration
  • Privacy Policy Distributed


The Fiscal Cliff

Unless our government acts soon; come January 1, 2013, our country is faced with the expiration of the Bush era tax cuts, the payroll tax cut, and other important tax-relief provisions (capital gains, interest income, and death tax rate are all scheduled to increase).  At the same time, lawmakers may have to raise the debt ceiling once again, potentially triggering another standoff in Congress.  Are your financial investments aligned for this possible change?