Tag Archives: Form 8-R

CTA and CPO Registration Form 8-R Changes

Fingerprint Information Now Required in Form 8-R

As discussed below, the information which is included on an AP or Principal’s Fingerprint Cards (sex, race, eye color, etc) will now be part of the NFA Form 8-R.  Additionally, the NFA will now make certain notifications to NFA member firms with respect to their application.

The full notice from the NFA is reprinted below.

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Fingerprint Card Demographic Information and Email Notifications Enhancements

The Spring 2010 NFA Member Newsletter reported an Online Registration System (ORS) enhancement that will require fingerprint card demographic information (such as sex, race, eye color, hair color, height and weight) be entered on the Form 8-R application. This enhancement is scheduled to be deployed on June 17, 2010. The fingerprint card demographic information is used to conduct a criminal background check with the U.S. Federal Bureau of Investigations (FBI). Because this information is already collected on the FBI fingerprint card, it may be helpful to have the fingerprint card available when completing the Form 8-R application.

Collecting this information in the Form 8-R applications will allow NFA to electronically submit fingerprint cards to the FBI in a timelier manner by downloading the fingerprint card demographic information directly from the 8-R form.

A view and update page are also being developed to display and update, if necessary, the fingerprint card demographic information. These pages can be accessed using the “View Registration Information” or “Update/Withdraw Registration Information” menu under the “Personal Profile” section.

For Form 8-R applications completed prior to the implementation of this enhancement, the demographic fields on the view and update pages will be blank. However, this information is not required to be completed until such time as a new Form 8-R application is filed.

In addition to the fingerprint card demographic information enhancement, we have also added two new notification types to the NFA E-mail Notification Service:

  1. Firm or Individual registered, temporary licensed, approved or conditioned
  2. Firm Account Balance is below $1000

The Security Manager of the firm can add the new notification types for existing email recipients or can add and/or delete recipient(s) to receive email notifications by clicking on “NFA E-mail Notification Service” under the “Security” tab in ORS.

If you have any questions concerning this matter, please contact the Information Center by phone at 312-781-1410 or 800-621-3570 or send an email to [email protected] Representatives are available Monday through Friday from 8:00 a.m. to 5:00 p.m. CST.

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Other related hedge fund law articles:

Cole-Frieman & Mallon LLP provides comprehensive hedge fund start up and regulatory support for commodity pool operators.  Bart Mallon, Esq. can be reached directly at 415-868-5345.

How to register as a CPO or a CTA

Many hedge fund managers choose to utilize futures and/or commodities in their trading purposes. Generally such managers will need to register as commodity pool operators (“CPO”) and as commodity trading advisors (“CTA”). The hedge fund itself will be deemed to be a commodity pool. For purposes of the Commodities Exchange Act (“CEA”), a future and commodity are functionally equal as it relates to hedge fund manager registration. Registration as a CPO or a CTA is an often overlooked part of the hedge fund formation process. Your attorney should discuss the requirements for registration and whether any exemptions from registration are available.

In addition to hedge fund managers, retail foreign exchange (“Forex”) managers may very soon be required to register because of the recently passed “Farm Bill.” The retail Forex markets have been very loosely regulated and the CFTC and NFA have been clamoring for authority to regulate this are of the markets. Accordingly, this article will give you the basics on how to register as a CPO and/or a CTA.

A very general outline of the CPO registration process is as follows:

Prerequisite – the Series 3 exam

Each CPO or CTA firm will need to have at least one Associated Person (AP). Generally an AP will be anyone in the firm who has contact with clients in something more than a purely administrative or clerical role. All managers and non-clerical employees will be APs. All APs must have passed the Series 3 exam. Information on the Series 3 exam:

  • Series 3 (National Commodity Futures Examination)
  • Cost: $95
  • Number of Questions: 120 True/False and Multiple Choice
  • Subject Matter: (part 1) Market knowledge and (part 2) U.S. regulations
  • Time: 2 hours 30 minutes
  • Passing Score: 70% for each part

Like the Series 65 exam, I highly recommend you spend plenty of time studying for the exam. If you would like some suggestions on various study guides, please let me know.

Filing the application forms with the NFA

During this process your compliance professional will: gain access to the NFA’s registration system on your behalf, input certain basic information on the Form 7-R (for your CPO/CTA firm) and Form 8-R (for the initial AP) – generally you will provide this information to your compliance professional prior to completing these forms, and submit the 7-R and 8-R on your firms behalf.

After the Form 7-R and 8-R have been submitted you will need to pay for registration ($200 registration fee for the CPO or CTA; $85 for each associated person or principal; $750 for NFA membership (this is an annual fee)). After payment has been submitted, the NFA will review your application. Typically registration should be complete within about 3-5 weeks. The next step will be to have your disclosure document approved by the NFA – your compliance professional can help you with this process.

You will be able to check on your registration through the NFA’s BASIC system.

Definitions

According to the CFTC website, the definition of CPO and CTA are as follows:

Commodity Pool Operator (CPO): A person engaged in a business similar to an investment trust or a syndicate and who solicits or accepts funds, securities, or property for the purpose of trading commodity futures contracts or commodity options. The commodity pool operator either itself makes trading decisions on behalf of the pool or engages a commodity trading advisor to do so.

Commodity Trading Advisor (CTA): A person who, for pay, regularly engages in the business of advising others as to the value of commodity futures or options or the advisability of trading in commodity futures or options, or issues analyses or reports concerning commodity futures or options.

Associated Person (AP): An individual who solicits or accepts (other than in a clerical capacity) orders, discretionary accounts, or participation in a commodity pool, or supervises any individual so engaged, on behalf of a futures commission merchant, an introducing broker, a commodity trading advisor, a commodity pool operator, or an agricultural trade option merchant.