MFA Submits Letter to NFA on Proposed CPO/CTA Capital Requirements

MFA submitted a letter to the National Futures Association (NFA) in response to its Notices to Members I-14-03 and I-14-05 on “CPO/CTA Capital Requirement and Customer Protection Measures.”  In the letter, MFA objected to the imposition of capital requirements on commodity pool operators (CPOs) and commodity trading advisors (CTAs) because, among other things: (i) such requirements would not ensure greater protection of customer funds; (ii) substantial regulatory protections already exist; and (iii) such requirements would be costly and complicated to implement and monitor.  MFA also considered the additional customer protections measures for which NFA requested comment.  In particular, MFA expressed concern with the NFA proposal that would require an independent third party to review and authorize a CPO’s disbursement of pool funds as such a requirement could be unduly burdensome, might hinder the investment and other operations of the pool, and could introduce additional risk into the system.