Wednesday, February 15, 2012

CFTC Releases Final Rules Amending Registration and Compliance Obligations for CPOs and CTAs

On February 9, 2012, the U.S. Commodity Futures Trading Commission ("CFTC") released final rules amending the registration and compliance obligations for commodity pool operators ("CPOs") and commodity trading advisors ("CTAs"). Among other amendments, annual exemption renewals are now required to be filed with the National Futures Associates by those persons relying on the exemptions from CPO or CTA registration provided under CFTC rules 4.5, 4.13 or 4.14. Most notably, however, the CFTC is eliminating the exemption from CPO registration set forth in Regulation 4.13(a)(4), which permits a CPO to be exempted from registration with respect to any pool where (i) the interests in the pool are exempt from registration under the Securities Act of 1933, as amended, and such interests are offered and sold without marketing to the public in the U.S. and (ii) (x) each natural person participant is a "qualified eligible person" and (y) each non-natural person participant is a "qualified eligible person" or an "accredited investor". This Regulation is commonly relied upon by commodity fund managers to private investment funds that comply with Section 3(c)(7) of the Investment Company Act of 1933, as amended. For those CPOs relying on this Regulation there is a transition period until December 31, 2012, at which point they will need to register with the CFTC or rely on a different registration exemption.

Link to the Final Rules: