CPO and CTA Quarterly Reporting Requirements for Period Ending March 31, 2016
Each commodity pool operator (“CPO”) Member and commodity trading advisor (“CTA”) Member with reporting requirements under Commodity Futures Trading Commission (“CFTC”) Regulation 4.27 is required to comply with National Futures Association (“NFA”) quarterly reporting requirements. NFA Compliance Rule 2-46 imposes quarterly reporting requirements on CPOs operating commodity pools and on CTA that direct trading of commodity trading interests.
The CTA quarterly report (“Form CPR”) is used to collect general information about the reporting CTA and its trading program(s). For the period ending March 31, 2016, CTAs are required to submit Form CPR by Monday, May 16, 2016.
A CPO must report specific information about the firm and the pools it operates on the CPO quarterly report (“Form PQR”). For the period ending March 31, 2016, CPOs are required to submit Form PQR by Tuesday, May 31, 2016.
The quarterly reports are required to be filed in a timely manner. Failure to file reports by the required due date is a violation of NFA Compliance Rules and CFTC Regulations. CPOs and CTAs that do not comply with filing deadlines could be subject to disciplinary action. Form CPR and Form PQR must be filed electronically using NFA’s EasyFile system.
Approval Process for Risk-Based Initial Margin Models for Uncleared Swaps for Certain SDs and MSPs
April 14, 2016, the NFA released Notice to Members I-16-13 to provide further details regarding the submittal process for the review of “CFTC Covered Swap Entities” initial margin models subject to the September 1, 2016 approval date (“Approval Date”). “Covered Swap Entities” are defined in the Dodd-Frank Act as each swap dealer (“SD”) and major swap participant (“MSP”) that is not subject to oversight by a prudential regulator. This Notice is a follow up to March Notice I-16-11, in which the NFA set out its plan to review and approve risk-based initial margin models for uncleared swaps for certain SDs and MSPs. Notice I-16-13 and Notice I-16-11were issued in response to CFTC’s final rules on margin requirements for uncleared swaps of SDs and MSPs (“Margin Rules”).
Notice I-16-13 provides an overview of the NFA’s review process for CFTC Covered Swap Entities seeking NFA approval of a margin model by the Approval Date. Further, CFTC Covered Swap Entities are required to obtain NFA approval of material modification to existing margin models and prior to extending the use of an approved margin model to additional product types.
COMMODITY FUTURES TRADING COMMISSION
CFTC No-Action Relief and Guidance on Ownership and Control Reporting
On April 8, 2016, the CFTC’s Division of Market Oversight (“DMO”) issued two (2) no-action letters and published guidance relating to the ownership and control (“OCR”) final rule (“OCR Final Rule”).
CFTC Letter 16-32 details the conditional time-limited no-action relief from certain OCR data reporting requirements of Parts 17, 18 and 20 of the CFTC regulations that were implemented pursuant to the OCR Final Rule. As per Letter 16-32, reporting parties will be required to electronically submit OCR Forms 102A, 102B and 102S effective September 29, 2016. Letter 16-32 also provides time-limited, substantive relief from certain reporting obligations on the OCR forms. Existing reporting methods will remain in place until the transition to electronic reporting, as covered in no-action Letter 16-32.
CFTC Letter 16-33 provides conditional time-limited no-action relief under Part 17 of CFTC regulations regarding identifying information reportable on certain OCR forms. Reporting parties with reporting obligations on OCR Forms 102A and 102B will be permitted to mask certain indentifying information, subject to satisfying specific conditions, as outlined in Letter 16-33.
To coincide with the issuance of No-Action Letter 16-32 and 16-33, the DMO published guidance regarding the terms “owner” and “controller” in the OCR Final Rule. The DMO Guidance reproduces ownership and control questions asked in OCR Forms 102A and 102B, and responds directly to questions raised by reporting parties regarding the terms “owner” and “controller,” as used in these questions.
The issuance of Letter 16-32, Letter 16-33 and the DMO Guidance was announced in CFTC Press Release 7357-16.
For further information about any of the topics covered, please feel free to contact the Ruddy Law Office, PLLC (www.ruddylaw.com) or 202-797-0762.
