NFA Eliminates Financial Ratio Reporting for CPOs and CTAs

The National Futures Association ("NFA") repealed an Interpretive Notice which required commodity pool operators ("CPOs") and commodity trading advisers ("CTAs") to report quarterly certain financial ratios.

According to the Notice, the 2017 Interpretive Notice 9071 had required CPOs and CTAs to report certain financial ratios related to a member's financial condition to the NFA on a quarterly basis on NFA Forms PQR and PR.

The NFA stated that the requirements were originally adopted to "inform exam priorities by identifying firms with financial difficulties that might impair their ability to operate in customers' best interests." However, the NFA found that the financial ratios were not particularly useful in identifying problematic firms. The NFA explained that the repeal reduces the reporting burden on CPO and CTA members. Furthermore, the NFA noted that it now requires CPO members to submit other financial information under Compliance Rule 2-50 ("CPO Notice Filing Requirements"), which has proven more useful in monitoring financial health.

The NFA said the repeal is effective immediately.