Submitting Forex Disclosure Documents to the NFA

As we have mentioned before the CFTC and the NFA have not released the information regarding the forex registration requirements, but in the interest of preparing forex managers for the coming registration, we are providing an overview of the likely requirements and the process to become a fully compliant Forex CPO or Forex CTA.  Pursuant to that objective we have previously outlined the likely requirements for Forex Disclosure Documents and now discuss the process of submitting those documents to the NFA.

Submit Documents via Email

Once the forex disclosure documents have been drafted the documents will likely need to be submitted to the NFA for their review.  The submission of the documents will likely be done online by the forex attorney who will email the documents to the NFA (a similar process is done with CPO and CTA disclosure documents).  From the date that the documents are submitted, the NFA will have 14 days to review and respond to the attorney or manager.  During these 14 days (sometimes shorter) the NFA will do a thorough review of the documents to make sure that each of the CFTC requirements has been sufficiently met.

Most times the NFA will come back with a list of items that will need to be addressed in successive drafts of the documents.  This list may be as short as 8 items or may be several pages long.  The forex attorney will address the items within the documents and/ or provide background explanations to the NFA.  Sometimes that lawyer will need to discuss certain aspects of the NFA’s items with the forex manager.

The NFA examiners will focus on all aspects of the CFTC regulations, but they will be particularly attentive to the disclosure requirements as they relate to the forex manager’s or the forex pool’s performance history.  Accordingly, we recommend that managers spend sufficient time in this area to make sure that all data and calculations are correct.

The back and forth process

After the documents have been revised to account for the items in the NFA’s response, the documents will be submitted online once again.  It is likely that after the second submission the NFA will again come back with items to be addressed.  Usually the process will entail 2 to 3 “back and forths” with the NFA and it will not be uncommon for the forex attorney to engage in more back and forths or to discuss the program and documents with the NFA.

If the forex manager is providing advice to a hedge fund (as opposed to simply a separately managed account), there are likely to be more comments/issues to discuss because of the difference of the two disclosure documents (approximately 25-40 pages for a Forex CTA versus approximately 80-130 pages for a Forex CPO).

Timing of Approval

Because each forex trading program and each forex manager is different, and because of the vagaries of the NFA’s review process, we will not be able to guarantee that forex disclosure documents will be approved within a certain time period.  However, most forex managers can expect that their disclosure documents will be approved within 3-6 weeks.  Generally the manager will have taken the Series 34 exam prior to beginning this process.  Many times the manager has already been registered with the NFA as a Forex CPO or a Forex CTA, but if the manager is not registered then he may want to think about submitting the disclosure documents concurrently with the registration – managers which are subject to time pressures are advised to talk about this option with their forex attorney.

Other HFLB articles:

Please contact us if you have any questions.

Leave a Reply