- CFTC and NFA Afford Relief from Certain CTA Periodic Reporting Obligations
- August 7, 2015 | Authors: Brian Barrett; James M. Cain; Daphne G. Frydman; David T. McIndoe; Mark D. Sherrill
- Law Firms: Sutherland Asbill & Brennan LLP - New York Office ; Sutherland Asbill & Brennan LLP - Washington Office
On July 21, the staff of the Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) published an exemptive letter that provides relief from periodic reporting on CFTC Form CTA-PR to commodity trading advisors (CTAs) that do not direct client accounts. The relief is self-executing and effective immediately.
CFTC regulations require CTAs to file a completed CFTC Form CTA-PR with the National Futures Association (NFA) on an annual basis. CFTC Form CTA-PR requires identifying information about the relevant CTA, the trading programs offered by the CTA, and the commodity pool assets directed by the CTA.
In response to a request from the NFA, the DSIO staff deemed it appropriate to afford relief from the CFTC Form CTA-PR filing requirement to CTAs that do not “direct” client accounts. CFTC Rule 4.10(f) defines the term “direct” as referring to an “agreement whereby a person [i.e., a CTA] is authorized to cause transactions to be effected for a client’s commodity interest account without the client’s specific authorization”1 or, in other words, discretionary trading. According to the DSIO staff, requiring a CTA that does not direct client accounts to file CFTC Form CTA-PR provides limited additional information regarding that CTA. Accordingly, the DSIO staff does not believe that requiring such CTAs to file a CFTC Form CTA-PR furthers the purposes of the CFTC’s regulations.
Following the DSIO’s publication of the exemptive letter, on July 30 the NFA issued a notice to members highlighting the DSIO’s relief and granting further relief to CTAs that do not direct client accounts. Pursuant to NFA compliance rules, CTAs are required to file an NFA Form PR on a quarterly basis. NFA Form PR, like CFTC Form PR, requires identifying information about the relevant CTA, the trading programs offered by the CTA, and the commodity pool assets directed by the CTA. It also requires additional information, including with respect to the CTA’s key relationships and trading programs. Per the NFA’s July 30 notice, CTAs that do not direct client accounts will no longer be required to file NFA Form PR. CTAs wishing to avail themselves of the relief afforded from the NFA Form PR filing requirement must notify the NFA by August 13, 2015, by amending their CTA Annual Questionnaires.
1 17 C.F.R. § 4.10(f) (2015).