SEC and CFTC Jointly Propose Private Fund Systemic Risk Reporting Rule


The Commodity Futures Trading Commission and Securities Exchange Commission jointly proposed rules that would implement Sections 404 and 406 of the Dodd-Frank Wall Street Reform and Consumer Protection Act by creating a new Form PF, which is designed to gather information regarding the private fund industry that would be useful to the Financial Stability Oversight Council in monitoring systemic risk. Form PF would be required to be filed periodically by any investment adviser registered or required to be registered with the SEC that advises one or more private funds. The proposed CFTC rule would require commodity pool operators (CPOs) and commodity trading advisors (CTAs) registered with the CFTC to file Form PF with the SEC in lieu of proposed CFTC filing requirements, but only if those CPOs and CTAs are also registered with the SEC as investment advisers and advise one or more private funds. Information reported on Form PF would generally remain confidential.

Under the proposed rules, smaller private fund advisers (less than $1 billion in assets under management) would file Form PF once a year and would report only basic information regarding the private funds they advise, including details regarding assets under management, borrowings and leverage, derivatives, credit providers, investor concentration and fund performance. Smaller private fund advisers that manage hedge funds would also report information about fund strategy, counterparty credit risk and use of trading and clearing mechanisms.

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