March 18, 2026

The National Futures Association (“NFA”) Amends Compliance Rule 2-45

William J. Breslin, David S. Mitchell Fried Frank + Follow Contact LinkedIn Facebook X Send Embed

NFA’s Board of Directors (“Board”) has adopted proposed amendments to NFA Compliance Rule 2-45 and its Related Interpretive Notice 9062-NFA Compliance Rule 2-45:  Prohibition of Loans By Commodity Pools to CPOs and Related Entities (“Interpretive Notice 9062”).  NFA has submitted the proposed amendments to the Commodity Futures Trading Commission (“CFTC”) and it is expected that the proposed amendments will become effective shortly.  These amendments add a broader, more generic exception from Compliance Rule (“CR”) 2-45 for certain types of “large CPOs” to permit them to make loans or advances of pool funds to an affiliated or related party, subject to meeting certain terms and conditions.  NFA’s Board has concluded that these transactions are not the type NFA intended CR 2-45 to prohibit when it was originally adopted in 2009.

Discussion

NFA, the self-regulatory organization for registered commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”), adopted CR 2-45 in response to concerns regarding improper loans or advances of pool assets to the CPO or its principals, which resulted in significant losses of pool participant funds when such loans or advances were not repaid.  NFA CR 2-45, as originally enacted, is a broad prohibition, subject to specific exceptions for certain types of transactions which NFA has concluded are engaged in by CPOs on a regular basis and as part of their normal course of business and thus are not the types of transactions CR 2-45 was designed to prohibit.  These exceptions have been set forth in Interpretive Notice 9062 and include exceptions for certain securities borrowings and securities loans, guarantee obligations, loans to wholly-owned subsidiaries of a pool, repurchase and reverse repurchase agreements, and tax-related distributions.

However, in response to requests from large CPO members and its further consideration of these issues, NFA is amending CR 2-45 to provide a broader exception for certain types of “large CPOs” that will enable them to make loans or advances of pool assets to affiliated or related entities in furtherance of trading and investment strategies that are common in the marketplace, subject to meeting various criteria.  Under this new exception, a member CPO may engage in an otherwise prohibited loan or advance, provided (i) the CPO is a registered investment adviser with the Securities and Exchange Commission (the “SEC”) or is affiliated with one or more SEC-registered advisers; (ii) the CPO, along with any affiliated SEC-registered advisers, collectively manages at least $1.5 billion in assets (“AUM”) [1]; and (iii) the CPO files an exemption for the pool under CFTC Rules 4.13 or 4.7 or operates the pool pursuant to CFTC Staff Letter 25-50. [2] The CPO must be compliant with these assets under management and pool exemption filing requirements at the time the CPO makes the loan or advance and at the time that any material modifications such as an increase in the loan amount or an extension occurs.

To ensure that the loan or advance is for the benefit of pool participants, this exception requires that the CPO maintain specified records demonstrating that the loan or advance benefits the lending pool's participants, and that the CPO reasonably believes that the recipient can repay the loan or advance and that the terms of the loan or advance are commercially reasonable and fair. In this regard, the CPO must regularly monitor the recipient’s compliance with the terms of the loan or advance.  In the event of the recipient’s noncompliance, the CPO must take actions as appropriate that it reasonably determines to be in the best interests of the lending pool. A CPO should also maintain books and records demonstrating that it has satisfied these ongoing monitoring obligations and, in the event of non-compliance, the evaluation that was undertaken to determine what appropriate actions, if any, it took in the best interests of the lending pool.

In addition, the amendments codify within CR 2-45 the other categories of lending transactions, which have been permitted but are currently described in Interpretive Notice  9062 such as for guarantee obligations and loans to wholly-owned subsidiaries of a pool.  Lastly, the amendments define what the term “affiliated or related” means for purposes of CR 2-45. [3] This definition should assist member CPOs in determining whether a loan or an advance to an entity or individual would be a loan or an advance to such a party and thus be subject to the prohibition in CR 2-45, absent the applicability of an exception.

Analysis

In adopting these amendments, NFA is taking action consistent with the current deregulatory agenda of the CFTC and the SEC. Specifically, NFA noted that the CFTC Staff has recently provided no-action relief from CPO registration to CPOs who are registered investment advisers and whose pool participants meet the “qualified eligible person” definition. [4] NFA noted further that a CPO who meets the criteria for no-action relief may withdraw from CPO registration and NFA membership and thereby no longer be subject to CR 2-45. In that connection, NFA’s Board recognized that firms which elect to remain registered CPOs and NFA members should not be subject to regulatory restrictions that may prevent them from engaging in transactions that persons exempt from CPO registration may undertake. [5] In determining to provide an additional exception to permit “large CPOs” to make loans or advances to affiliated or related entities, NFA’s Board also noted that since its adoption in 2009, NFA’s disciplinary cases alleging violation of CR 2-45 have involved CPOs that manage significantly less than $1.5 billion of assets.

[1] An SEC-registered investment adviser with $1.5 billion in hedge fund AUM is considered a “large hedge fund adviser” and subject to increased reporting requirements with the SEC.

[3] See Section (b) of CR 2-45.

[4] See CFTC Letter No. 25-50 (December 19, 2025) and CFTC Letter No. 26-06 (February 26, 2026).

[5] In a similar vein, NFA’s Board recently repealed its financial reporting requirements for member CPOs and CTAs relating to quarterly reporting of two financial ratios on NFA Forms PQR and PR, respectively. See here for NFA’s March 3, 2026 Proposed Repeal of NFA Interpretive Notice 9071.

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