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Gary Gensler, Chairman, CFTC

CFTC issues final rule amending registration and compliance obligations for CPOs and CTAs

The Commodity Futures Trading Commission (CFTC) has issued a final rule regarding changes to Part 4 of the Commission’s regulations involving registration and compliance obligations for commodity pool operators (CPO) and commodity trading advisors (CTA). 

The rule increases transparency to the CFTC of CPOs and CTAs acting in the futures and swaps markets and enhances protections for their customers.  The rule passed 4-1, with Chairman Gary Gensler (pictured), and Commissioners Chilton, O’Malia and Wetjen voting in favour and Commissioner Sommers voting against the final rule. The rule, which was first proposed on January 26, 2011, will be effective 60 days after publication in the Federal Register.

Specifically, the rule adopted by the Commission today rescinds the exemption from registration provided in section 4.13(a)(4); removes relief from the certification requirement for annual reports provided to operators of certain pools offered only to qualified eligible persons under section 4.7(b)(3); modifies the criteria for claiming relief under section 4.5; requires the annual filing of notices claiming exemptive relief under several sections of the Commission’s regulations; and, lastly, adopts amendments that include new risk disclosure requirements for CPOs and CTAs regarding swap transactions.  Additional summary information can be found in the fact sheet and Q and A document listed under Related Links.

The Commission today also released a proposed rule that seeks public comment on reducing compliance burdens associated with registered investment advisors who would be required to register as CPOs under the changes to section 4.5.

The proposed rule, which was adopted unanimously by the Commission, is inviting public comment on amending the reporting requirements applicable to certain investment companies registered under the Investment Company Act of 1940, whose advisors would be required to register with the Commission as CPOs.

The Commission received a number of comments regarding the changes to section 4.5.  Specifically, commenters suggested that sponsors of investment companies registered with the Securities and Exchange Commission (SEC), which would also be required to register as CPOs under section 4.5, may be subject to duplicative, inconsistent, and possibly conflicting, disclosure and reporting requirements. This proposed rule-making seeks to harmonise CFTC and SEC requirements to minimise the compliance burden on these registrants.

Comments should be submitted no later than 60 days after publication in the Federal Register.


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