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The New Year Rings in New Requirements for NFA Member Asset Managers

In the final weeks of 2018, the National Futures Association (“NFA”) issued new requirements applicable to asset managers who are members of the NFA that will take effect in 2019. First, the NFA amended its Interpretive Notice 9070, “NFA Compliance Rules 2-9, 2-36 and 2-49: Information Systems Security Programs” (the “Cybersecurity Notice”). The amended Cybersecurity Notice adds an NFA notification obligation, employee training requirements, and specific approval procedures to the written information systems security program (“ISSP”) required of each NFA member firm (a “firm”) under the original Cybersecurity Notice issued in 2016. In addition, Interpretive Notice “NFA Compliance Rule 2-9: CPO Internal Controls System” (the “Internal Controls Notice”) requires commodity pool operator (“CPO”) members to establish a system of internal controls and provides guidance on designing and implementing such controls. The Cybersecurity Notice will become effective on April 1, 2019 and we expect the Internal Controls Notice to be effective on April 1 or soon thereafter.

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Ropes & Gray LLP Joins Firms in Volcker Rule Interpretation on Parallel Fund Structure

Time to Read: 1 minutes Practices: Hedge Funds, Investment Management, Private Investment Funds

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Last week, Ropes & Gray, along with 14 other major law firms actively representing private fund sponsors and investors, signed this consensus interpretation memorandum, prepared under the auspices of the Private Equity Growth Capital Council. The memorandum provides that the Volcker Rule should not require the integration of private funds offered and sold by non-bank sponsors to non-U.S. banking entities with parallel funds offered to U.S. investors. Such integration would effectively bar investment by non-US banking entities in parallel fund structures established by U.S. fund sponsors. Our view, shared by the other signatories to the memorandum, is that investments in such parallel funds by non-U.S. banking entities should not be prohibited by the Volcker Rule, and such arrangements are not evasions of the Volcker Rule. Our interpretation is based on the recently adopted Volcker Rule final implementing rules and related regulatory narrative. By reaching agreement on this important Volcker Rule interpretative issue, the firms intend to ease concern over the integration issue, which has slowed the development of Volcker Rule compliant structures for new private funds seeking investment by non-U.S. banking entities and the restructuring of legacy investments into Volcker Rule compliant structures. Subsequent rulemaking, written interpretations or guidance may, of course, require Ropes & Gray and the other signatories to revise their views on the current state of the law.  

Questions about this development can be directed to Mark Nuccio ( or the Ropes & Gray attorney who usually advises you.

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