Introduction

The Commodity Futures Trading Commission (CFTC) on February 9, 2012 adopted final rules under the Commodity Exchange Act as amended (CEA) that modify and eliminate certain CFTC registration exclusions and exemptions widely used by sponsors of investment companies registered under the Investment Company Act of 1940 as amended (1940 Act) (mutual funds) and private invest-ment funds.1 These rule changes will result in significant changes to the manner in which both public and private funds using commodity futures, commodity options and many deriva-tives will be offered, operated, and regulated, as well as result in significant costs to those funds and their advisers. Every public and private adviser will need to evaluate its business and operational and compliance infrastructures in light of these changes.
In summary, the final rules:

- reinstate and expand the trading and marketing criteria necessary for advisers to mutual funds to qualify under CFTC Regulation 4.5 for an exclusion from the definition of commodity pool operator (CPO);

- rescind the exemption under CFTC Regulation 4.13(a)(4) from CFTC registration for CPOs to commodity pools privately offered solely to qualifying investors...

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