Today, the Commodity Futures Trading Commission (CFTC) provided long-awaited clarification and relief to investment advisers that are registered with the CFTC as commodity pool operators (CPOs) and/or commodity trading advisors (CTAs). The CFTC issued final rules to harmonize certain compliance obligations of CPOs and CTAs with relevant Securities and Exchange Commission (SEC) requirements (Harmonization Rules) applicable to advisers to investment companies registered as such under the Investment Company Act of 1940 (RICs). The Harmonization Rules also amend certain CFTC compliance requirements that apply to all registered CPOs and CTAs.
The Harmonization Rules were initially proposed in February 2012. At that time, the CFTC finalized rules amending the compliance obligations of CPOs and CTAs, including eliminating a blanket exclusion from CPO status for advisers to RICs under CFTC Rule 4.5 and imposing a new de minimis trading threshold. As a result of this change, along with changes to the Commodity Exchange Act resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act, many advisers to RICs have registered as CPOs and CTAs. The CFTC proposed the Harmonization Rules to assist advisers to RICs, recognizing that many of the compliance obligations of CPOs and CTAs were conflicting or inconsistent with, or duplicative of, the relevant SEC requirements.
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