NFA Reminds CPOs and CTAs of Annual Affirmation Requirements for Active Exemptions

NFA issued guidance reminding CPOs and CTAs that failure to affirm an active exemption from registration will result in the exemption being withdrawn on March 2, 2023.

The guidance applies to (i) CPOs relying on an exemption from CFTC registration under CFTC Rule 4.13(a)(1)-(3), Rule 4.13(a)(5) ("Exemption from registration as a commodity pool operator") or Rule 4.5 ("Exclusion for certain otherwise regulated persons from the definition of the term 'commodity pool operator'"), and (ii) CTAs relying on an exemption under CFTC Rule 4.14(a)(8) ("Exemption from registration as a commodity trading advisor").

NFA reminded applicable CPOs and CTAs of the obligation to affirm those exemptions before March 1, 2023, and also provided guidance on how to file the affirmation through the NFA Exemptions System. NFA said that persons claiming exemption from CPO registration under the rules must also attest that neither they, nor their principals are subject to a statutory disqualification under CEA Section 8a(2) ("Registration of commodity dealers and associated persons; Regulation of registered entities").

Firms that fail to affirm registration exemptions by March 1, 2023 will have the exemptions withdrawn on March 2, 2023, which would subject registered CPOs and CTAs to the requirements of Part 4 of the CFTC Rules ("Commodity Pool Operators and Commodity Trading Advisors") and non-registrants to potential CFTC enforcement action.