CFTC Rule Proposals Regarding Registration of and Reporting by CPOs and CTAs: CFTC Proposes New Rules and Amendments Regarding Registration and Reporting Requirements for CPOs and CTAs; Certain Existing Exemptions and Exclusions Would Be Rescinded or Amended, Affecting the Ability of Registered Investment Companies to Utilize Futures, Options and Swaps, and Requiring Advisers to Many Private Funds to Register with the CFTC

Sullivan & Cromwell LLP - February 23, 2011

On January 26, 2011, the CFTC proposed rules that would, among other things, require registration of entities that are currently eligible for exemptions from registration as CPOs and CTAs. The proposed rules would also increase disclosure requirements for both newly registered and existing CPOs and CTAs and would require more information to be made available for prospective investors and for use in risk assessment by the Financial Stability Oversight Council. In particular, the proposed rules would make several changes, including:

  • Rescinding the exemptions from CPO registration under Sections 4.13(a)(3) and (a)(4) of the CFTC’s rules, which are exemptions that have been relied upon by operators of many private funds;
  • Revising the requirements for the exclusion from the CPO definition pursuant to Section 4.5 of the CFTC’s rules, which is the exclusion relied upon by numerous registered investment companies and other regulated entities;
  • Requiring the filing of certified annual reports by all registered CPOs;
  • Requiring the periodic reporting of data by CPOs and CTAs regarding their commodity pool assets; and
  • Mandating annual affirmation of exemptive relief claims for both CPOs and CTAs.

The CFTC requests comments on these proposals on or before April 12, 2011.