Aug 29, 2013 | News

CFTC Adopts Harmonizing Rule for CPOs of Registered Investment Companies

The CFTC recently adopted final rules concerning certain compliance obligations for CPOs of RICs under the Investment Company Act of 1940 and applicable amendments to all registered CPOs and CTAs.

In order to harmonize CFTC disclosure requirements with existing SEC requirements for RICs, the CFTC has now adopted a compliance regime that would deem a CPO to be in compliance if it satisfies all analogous SEC requirements.

In order to claim this relief, CPOs that fall within this category must:

  • file notice to NFA indicating that it is relying on the relief provided by CFTC Reg 4.12
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    and its intent to comply with all applicable SEC requirements

  • file with NFA any SEC required financial statements concerning the RIC
  • file notice with NFA if the CPO intends to use a third-party service provider for record keeping purposes
  • make the RIC’s current net asset value per share available to participants
  • make SEC required shareholder reports accessible on a website maintained by the CPO or its designee or make such reports available to participants
  • include a reference to the CFTC in the “Standard Cautionary Statement” required by CFTC Reg 4.24 and Rule 481 of the Securities Act of 1933
  • for CPOs with less than 3 years of operating history, disclose the performance of all CPO managed accounts and pools and have investment objective, policies, and strategies substantially similar to those of the applicable RIC.

The CFTC also rescinded the requirement that CPOs obtain a signed acknowledgement of receipt of the CPO disclosure document, which becomes effective upon publication in the Federal Register.

The CFTC adopted amendments requiring all CPOs and CTAs to update their disclosure document on an annual basis rather than every 9 months. All CPOs will be allowed to use 3rd party service providers to maintain their books and records as long as they file notice with NFA. As of right now, the notice is still in the development stage. These amendments become effective 30 days after publication in the Federal Register.

To view the final rules click here.