This week, the NFA sent a rule submission letter to the CFTC that will amend how CPO members notify the NFA of events affecting the pool’s ability to fulfill its obligations to investors.
While certain elements of NFA Compliance Rule 2-50 are already reported to the NFA, this update will change the manner and timeframe of such reporting.
An NFA Notice to Members will be issued setting out additional detail but, in summary, the Rule requires prompt notification in the following circumstances:
- CPO Member operates a commodity pool that is unable to meet a margin call(s);
- CPO Member operates a commodity pool that is unable to satisfy redemption requests in accordance with its subscription agreements
- CPO Member operates a commodity pool that has halted redemptions and the halt on redemptions is not associated with pre-existing gates or lockups, or a pre-planned cessation of operations; or
- CPO Member receives notice from a swap counterparty that a pool the CPO Member operates is in default.
Click here to see the proposed rule and related Interpretive Notice for more guidance.