On February 10th, the National Futures Association (NFA) published three Notices to Members identifying common deficiencies noted in examinations of commodity pool operators (CPOs), commodity trading advisors (CTAs), futures commission merchants (FCMs), forex dealer members (FDMs), introducing brokers (IBs), and swap dealers (SDs).

This blog post summarizes these notices and the identified deficiencies.

In addition, we have prepared A Summary of Deficiencies Found in NFA Exams February 2020 to supplement the information presented in this blog post.Continue Reading NFA Announces Common Deficiencies Identified During Examinations of CPOs, CTAs, FCMs, FDMs, IBs and Swap Dealers

The Securities and Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”) announced parallel enforcement orders against an investment adviser (the “Adviser”) and its Chief Executive Officer for derivatives-related oversight failures.  The alleged failures related to the Adviser’s management of a registered investment company that invested primarily in options on stock-index futures contracts.  The Adviser was regulated by the SEC and the CFTC as a registered investment adviser and registered commodity pool operator (“CPO”), respectively.

This blog post will summarize these enforcement orders, since we believe that they are relevant to investment advisers subject to joint oversight by the SEC and the CFTC.  As a general matter, we also believe that this matter highlights the importance of disclosure and consistent risk management practices in connection with any advisory client’s derivatives-based investment strategy.Continue Reading Mutual Fund Corner: SEC and CFTC Charge Investment Adviser and Portfolio Manager for Derivatives-Related Failures

On Februrary 10th, the National Futures Association (“NFA”) announced that it was making two changes to its EasyFile system.  Both changes relate to the information that is required to be filed by a commodity pool operator (CPO) in respect of annual pool financial statements.  In particular, a CPO must now:
Continue Reading Attention CPOs: NFA Now Requires Cover Page and An Additional Financial Item

On January 15th, the National Futures Association (“NFA”) issued its Notice to Members I-15-02 (the “NTM”).

The NTM will be of interest to NFA Members, such as futures commission merchants (“FCMs”) and introducing brokers (“IBs”), and any entity in a mutual or hedge fund complex that has not yet affirmed its status for calendar year 2015 as:

  • an exempt commodity pool operator (“CPO”) under Commodity Futures Trading Commission (“CFTC”) Regulation 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), or 4.13(a)(5);
  • an excluded CPO under CFTC Regulation 4.5; or
  • an exempt commodity trading advisor (“CTA”) under CFTC Regulation 4.14(a)(8).

These annual affirmations are due by March 2, 2015.

The remainder of this posting is an overview of the NTM, which is available here.Continue Reading NFA Notice to Members I-15-02: Affirm CPO/CTA Exemptions and Exclusions by March 2nd, NFA Members Given Tools to Monitor Affirmations