On March 20, 2020, the Commodity Futures Trading Commission (CFTC) released its third wave of COVID-19 pandemic-related relief, issuing a no-action letter (the No-Action Letter) that extends the deadlines for CFTC-registered commodity pool operators (CPOs) to (1) file Form CPO-PQR; (2) file and deliver pool annual reports; and (3) distribute periodic account statements.1 On March 23, NFA sent a notice2 to its members providing relief to member CPOs and commodity trading advisors (CTAs).
These actions follow a series of COVID-19 pandemic-related no-action letters and notices issued by the CFTC and NFA, respectively, over the past few weeks and are part of their respective attempts to provide practical, targeted relief to market participants in light of the evolving COVID-19 situation.3
The CFTC and NFA’s CPO and CTA relief is summarized below. The tables that follow these summaries provide additional details on the CFTC and NFA COVID-19-related actions to date.
CFTC Relief to CPOs
The No-Action Letter issued by the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) on March 20 provides the following three forms of relief to CFTC-registered CPOs. Notably, reliance on this relief does not require a CPO to file any notice.
- Filing Deadline for Form CPO-PQR.
- Pursuant to CFTC Regulation 4.27, small and mid-sized CPOs4 are required to file annual reports on Form CPO-PQR within 90 days of year end. The No-Action Letter extends this deadline until May 15, 2020.
- Pursuant to CFTC Regulation 4.27, large CPOs5 are required to file quarterly reports on Form CPO-PQR within 60 days of each quarter end. The No-Action Letter extends the deadline for the first quarter of 2020 (the quarter ended March 31, 2020) until July 15, 2020. The No-Action Letter does not extend the deadline for the second quarter (the quarter ended June 30, 2020), which remains August 30, 2020—only 45 days after the extended deadline for quarterly reports for the first quarter.
- Filing Deadline for Pool Annual Report. Most registered CPOs are required to file and deliver to pool participants pool annual reports pursuant to CFTC Regulations 4.7(b)(3) or 4.22(c) within 90 days of the end of a pool’s fiscal year. The No-Action Letter provides an additional 45 days to file and provide these annual reports for any annual report due on or before April 30, 2020. This 45-day extension does not preclude a CPO from seeking additional time to file and provide annual statements pursuant to CFTC Regulation 4.22(c), up to a maximum of 180 days from the end of a pool’s fiscal year. The 45-day extension under the No-Action Letter does not further extend this 180-day period available under CFTC Regulation 4.22(c).
- Periodic Account Statements. In addition to pool annual reports, most registered CPOs must also distribute either quarterly or monthly account statements within 30 days of the end of the applicable period pursuant to CFTC Regulation 4.7(b)(2) or 4.22(b)(3).6 The No-Action Letter provides relief from this 30-day deadline for any periodic account statement with respect to a reporting period ending on or before April 30, 2020, provided that account statements are distributed to participants within 45 days of the end of the applicable period.
In the No-Action Letter, DSIO stated its expectation that CPOs relying on the relief establish and maintain a supervisory system reasonably designed to supervise the activities of personnel while acting from an alternative or remote location during the COVID-19 pandemic. The No-Action Letter also sets forth DSIO’s expectation that as COVID-19-related risks decrease, registrants will comply with all regulatory obligations from which DSIO has provided relief.
NFA Relief to CPOs and CTAs
Notice I-20-15 issued by NFA on March 23 provides relief to NFA member CPOs and CTA from NFA Compliance Rules 2-46 and 2-13 and works in conjunction with the relief provided by DSIO under the No-Action Letter.
Under NFA Compliance Rule 2-46, each CPO member is required to file NFA Form PQR for each pool it operates on a quarterly basis within 60 days of the quarters ending in March, June and September and within 90 days of the quarter ending in December. For the quarter ended December 31, 2019, NFA is extending the due date from March 30, 2020 until May 15, 2020, and for the quarter ending March 31, 2020, NFA is extending the due date from May 30, 2020 until July 15, 2020.
NFA Compliance Rule 2-46 also requires each CTA member to file NFA Form PR on a quarterly basis within 45 days of each quarter end. For the quarter ending March 31, 2020, NFA is extending the due date from May 15, 2020 until June 30, 2020.
Under NFA Compliance Rule 2-13, CPO members are required to file pool annual reports with NFA and provide a copy to pool participants in accordance with the CFTC requirements described above. Notice I-20-15 provides that CPO members that adhere to the revised deadlines under the No-Action Letter will be deemed to be in compliance with NFA’s requirements under NFA Compliance Rule 2-13.
CPO members are also required under NFA Compliance Rule 2-13 to distribute periodic pool account statements in accordance with the CFTC requirements described above. Notice I-20-15 provides that CPO members that adhere to the revised deadlines under the No-Action Letter will be deemed in compliance with NFA’s requirements of NFA Compliance Rule 2-13.
The tables that follow summarize the actions of the CFTC and NFA to address COVID-19. Please click here to see the tables.
1CFTC No-Action Letter, CFTCLTR No. 20-11 (March 20, 2020), https://www.cftc.gov/csl/20-11/download.
2NFA, Coronavirus (COVID-19) Update—Regulatory Relief for CPOs and CTAs, No. I-20-15 (Mar. 23, 2020), https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=5218.
3The prior CFTC and NFA COVID-19-related actions are addressed in a previous Sidley Update available at https://www.sidley.com/en/insights/newsupdates/2020/03/us-commodity-futures-trading-commission-provides-pandemic-related-relief-to-commodity-pool-operators.
5A “large CPO” is defined as a CPO with greater than $1.5 billion in AUM.
6CPOs of pools with net asset values less than $500,000 and exempt pools under CFTC Regulation 4.7 are required to distribute quarterly statements, while all other pools are required to distribute monthly statements.
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