| Americas | Articles
Commodity Pool Operators (CPOs) are now obliged to file a notice with the NFA where the pool’s ability to fulfill its participation obligations is affected by specific events.
Interpretive Notice 9080 which was announced by NFA in April, is effective at June 30th. The Notice, aligned to Compliance Rule 2-50, is similar to Interpretive Notice 9074. This instituted a list of internal controls required to be implemented by CPOs in regard to various areas of business operations, with a focus on risk assessment and recordkeeping. The new Interpretive Notice is calling for specific reporting to NFA in the case that a market event or other event affects a commodity pool’s ability to fulfill its participant obligations.
The specific events stipulated in Compliance Rule 2-50 which would call for CPO Members to promptly notify NFA are:
- if a CPO operates a pool that cannot meet its margin call(s)
- if a CPO operates a pool that is unable to satisfy redemption requests in accordance with its subscription agreements
- if a CPO operates a pool that has halted redemptions (not related to existing gates or lockups, or a pre-planned cessation of operations)
- if a CPO receives notice from a swap counterparty that a pool it operates is in default.
Interpretive Notice 9080 further defines each of the above listed events.
Further guidance was expected from NFA on the notice filings but has not been forthcoming, leaving interpretation of the new requirements to be tailored to the firms’ respective operations.
We can help
Please get in touch for support related to new Compliance Rule 2-50 and Interpretive Notice 9080. As part of our US team of compliance consultants we have NFA specialists who can guide you through what’s needed.
