CFTC, NFA to Require Quarterly Hedge Fund Reporting

www.turnkeytradingpartners.com ^ | 3/25/10 | James Bibbings

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On March 17th of 2010 the self regulatory organization for commodities trading and retail foreign currency transactions in the United States, National Futures Association (“NFA”), announced a major change to the way Hedge, Commodity, and Forex funds operate. The change, titled “Compliance Rule 2-46” is NFA’s latest effort to work towards detecting and eliminating Madoff Style investment frauds within the industries they regulate. In order to comply with any set of new regulatory standards one has to first understand the intentions and implications of the adjusted policy. So what then does this adjustment mean for the commodity and forex industries?

Understanding 2-46

Beginning March 31, 2010 NFA Compliance Rule 2-46 will go into effect and be applicable to all NFA CPO members who currently have reporting obligations under the CFTC’s existing section 4.22 regulations....

...as of the quarter beginning April 1st, 2010, they will have to adhere to new quarterly reporting guidelines. For managers who may be wondering this new rule affects funds which are designated 4.7 (high net worth) exempt as well.

New Reporting Requirements

During the second quarter of 2010 NFA member CPO’s of all types will have much more stringent reporting requirements; No longer will one financial filing per year be satisfactory for affected firms. On Monday, May 17th of 2010 the first of many quarterly financial reports will be due to NFA via an extension to the regulators “Easy File” system. From that date forward NFA will require that CPO members submit to them the following financial information for all applicable funds 45 days after the close of each subsequent quarter they operate:

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Important information for investors and fund managers to be aware of. NFA and the CFTC looking trying to not be embarrassed like the SEC and FINRA on Madoff.