Recently, the CFTC issued rules to eliminate the 4.13(a)(4) exemption and add marketing and trading restrictions to the 4.5 exemption that exempted certain pool operators from registering as a CPO. Although the effective date of the 4.5 changes is still pending, entities that currently hold 4.13(a)(4) exemptions will only remain exempt until December 31, 2012. Prior to that date, exempt CPOs will need to consider whether their trading activities will qualify for an alternative exemption or whether they will need to become registered as a CPO.
Another of the recently adopted changes requires an annual reaffirmation of the remaining exemptions. Exempt pool operators will have 60 days after the calendar year-end to complete the reaffirmation process. Failure to reaffirm an exemption will result in the automatic withdraw of the exemption after the 60 days.
Pursuant to NFA Bylaw 1101, all NFA Members have the obligation to ensure that they are only doing business with other properly registered NFA Members or entities that are exempt from registration. Therefore, any pools that are carried, introduced or managed by your firm must be operated by an NFA Member CPO or an operator with a properly reaffirmed exemption. In order to prepare for this new requirement, firms are urged to review their accounts to identify these exempt pools and must implement procedures to check that the operators of these pools have either reaffirmed their exemption in 2013 or registered. Additionally, firms must repeat this review on an annual basis for all exempt pool accounts that they continue to carry, introduce or manage.
