On February 9, 2012, the Commodity Futures Trading Commission (CFTC) issued final rules that will increase CFTC regulatory burdens for registered investment companies (RICs) and private funds that use any futures or any swaps that are subject to the CFTC’s jurisdiction. The final rules significantly narrow the only exclusion from the definition of commodity pool operator (CPO) available to publicly offered RICs and eliminate two of the private fund industry’s most heavily relied-upon exemptions from CPO and commodity trading advisor (CTA) registration. The Final Rules also will subject registered CPOs and CTAs to new systemic risk reporting requirements.

In the preamble to the Final Rules, the CFTC suggests a broad reading of the “commodity pool” definition and, hence, the CPO registration requirement. According to the CFTC, any operator of a pooled investment vehicle, public or private, that enters into even a single swap contract could trigger the CPO registration requirement. This means that the operators of a number of entities that are not RICs or private funds, like real estate investment trusts (REITs) and business development companies (BDCs), also must consider whether they will be required to register with and be regulated by the CFTC as CPOs. Similarly, advisers to such entities will need to consider whether they are required to register with and be regulated by the CFTC as CTAs.

Depending on a CPO’s or a CTA’s current status, the effective date for compliance with these new rules could be as soon as 60 days following publication of the Final Rules in the Federal Register or as late as December 31, 2012 (some aspects of the rules could be effective even later, depending on when final rules are adopted to define “swap” and to establish swap margin).