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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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Reminder of Effective Date of Filing Requirement under CFTC Position Limit Aggregation Exemption Rules


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

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The new notice filing requirement for continued reliance on certain exemptions from aggregation under the CFTC’s position limit rules becomes effective on August 14, 2017. This requirement is under the CFTC’s final rules published on December 16, 2016, which amended the CFTC’s regulations on aggregation of positions for purposes of applying federal position limits on futures and options on futures on nine agricultural commodities. Under the amended rules, persons who intend to rely on certain position aggregation exemptions, including the existing independent account controller exemption and the new owned entity exemption, must first make a notice filing with the CFTC. The original effective date of the notice filing requirement was February 14, 2017, but this date was extended to August 14, 2017 (here). For additional information regarding the various position aggregation exemptions and notice filing requirements, see our prior Alerts here and here.

If they haven’t already done so, asset managers should review their business structures and trading programs in light of the regulatory changes to determine the availability of exemptions for various accounts and positions, to conduct outreach to others whose positions may be aggregated with theirs in order to coordinate on applicable exemptions and notice filings, to prepare the notice filings (which must include an explanation of the circumstances warranting disaggregation), and to work with their senior officers who must certify certain information in the notice filings.

The notice filings are to be made electronically. The link to the form to be filed and the filing portal is https://forms.cftc.gov/_layouts/PublicForms/NoticeFiling.aspx.

Please contact Deborah Monson, Jeremy Liabo or the Ropes & Gray attorney who usually advises you with any questions you may have or if you would like additional information.

 

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