The Commodity Futures Trading Commission and the National Futures Association in recent weeks have issued relief in response to the challenges that many market participants face in light of the coronavirus (COVID-19) pandemic. This LawFlash covers the latest relief provided.
For background on the relief provided by the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) thus far, read our March 19 LawFlash.
Form PQR, Pool Annual Reports, and Pool Periodic Account Statement Requirements (CFTC Letter No. 20-11): The CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) has provided commodity pool operators (CPOs) with relief from Form CPO-PQR (the annual report for small or mid-sized CPOs and the quarterly report for large CPOs), Pool Annual Reports, and Pool Periodic Account Statements by providing an extension to the filing and reporting deadlines. The relief applies to Annual Reports and Periodic Account Statements under both 4.7 and 4.22.
The new deadlines:
NFA Relief from CPO Reporting Requirements (NFA Notice I-20-15): Consistent with the CFTC’s CPO reporting relief, NFA issued relief from NFA Compliance Rules 2-13 and 2-46. NFA extended the due date for the December 31, 2019 PQR (due March 30) until May 15, 2020, and the due date for the March 31, 2020 PQR (due May 30) until July 15, 2020. NFA also extended the Form PR due date for the March 31, 2020 Form PR from May 15, 2020 to June 30, 2020.
Introducing Broker Certified Financial Reports (NFA Notice I-20-16) – NFA issued relief to introducing brokers (IBs) for the requirements to file a certified financial report as of the close of its fiscal year end within 90 days after the close of its fiscal year, or within 60 days for IB embers who are also registered with the US Securities and Exchange Commission as securities brokers or dealers.
Introducing Broker and Associated Person Registration for Foreign Brokers (CFTC Letter No. 20-12): DSIO will permit 30.5 Foreign Brokers (non-US introducing brokers who have applied for an exemption from IB registration pursuant to Regulation 30.5 to solicit or accept orders for or involving any foreign futures or foreign options transactions) to accept futures and swap orders from US persons for execution on US designated contract markets (DCMs) notwithstanding that such 30.5 Foreign Brokers have not qualified for an exemption from registration as an IB in accordance with the provisions of CFTC Regulation 3.10(c)(4).
In addition, personnel of the 30.5 Foreign Brokers who handle these orders will not be required to register as associated persons.
This relief is available until September 30, 2020, and is subject to the following conditions:
Major Swap Participant Registration Threshold Calculation (CFTC Letter No. 20-10): The DSIO provided relief to an insured depository institution from considering energy-related commodity swaps in determining whether it must register with the CFTC as a major swap participant (MSP) after the unprecedented drop in global demand for crude oil as a result of COVID-19, followed closely by the OPEC+ supply cut disagreement, which led to an unprecedented increase in the institution’s swap counterparty exposure relevant to the MSP registration threshold.
The relief, available until September 30, 2020, permits the insured depository institution to exclude the following swaps in its “aggregate uncollateralized outward exposure” calculation (relevant to the MSP definition and used to determine whether a person has a “substantial position” in swaps):
The CFTC is actively monitoring futures and swaps markets and market participants to determine if markets are functioning appropriately and without disruption. Market participants are encouraged to reach out to CFTC staff if issues arise.
For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Katherine Dobson Buckley
 Regulation 3.10(c)(4) provides an exemption from IB registration to a non-US person who is exempt from FCM registration pursuant to Regulation 30.10 so long as the non-US person is affiliated with a CFTC-registered FCM, limits its IB activities to institutional customers that it fully discloses to a registered FCM for the purpose of trading on a DCM, and does not solicit US persons for trading on a DCM, among other requirements.
 Pursuant to paragraph (4)(i)(C) of the definition of “swap dealer” in CFTC Regulation 1.3, or from being considered swap dealing activity pursuant to paragraph (5) of the definition of “swap dealer” in CFTC Regulation 1.3