NFA Issues Notice Regarding Effective Date of NFA’s Rules Regarding CPO Notice Filing Requirements
On April 13, the National Futures Association (NFA) issued Notice I-21-15 advising members firms that new NFA Compliance Rule 2-50 and its related Interpretive Notice become effective June 30. (The proposal of the new rule and Interpretive Notice was discussed in the March 12, 2021 edition of Corporate & Financial Weekly Digest.)
Compliance Rule 2-50 requires a CPO member to promptly notify NFA if it:
operates a pool that cannot meet its margin call(s);
operates a pool that is unable to satisfy redemption requests in accordance with its subscription agreements;
operates a pool that has halted redemptions (not related to existing gates or lockups, or a pre-planned cessation of operations); or
receives notice from a swap counterparty that a pool it operates is in default.
The related Interpretive Notice further describes each of the notification events identified in Compliance Rule 2-50 and provides guidance on whether specific events are deemed to trigger the requirement.
Alexander C. Kim also contributed to this article.