I. Introduction and Executive Summary
At an open meeting held on October 6, 2020, the Commodity Futures Trading Commission (the “CFTC” or the “Commission”) unanimously adopted final amendments to Form CPO-PQR and CFTC Rule 4.27 (the “Amendments”) designed to reduce reporting obligations of registered commodity pool operators (“CPOs”) under the Form while maintaining the Commission’s ability to oversee activities of CPOs and their operated pools.1 The Amendments reflect the Commission’s reassessment of the value and utility of information collected by Form CPO-PQR in light of lessons learned by the Commission since 2012, when the Form was adopted, as well as the emergence of alternate, and in many respects superior, monitoring and data collection tools now available to the Commission or in development.
This Client Alert summarizes the Amendments and related developments (including the Commission’s directives to its staff to give some areas further study), describes the background and regulatory goals, points out next steps for reporting CPOs, and discusses the comments received on the Commission’s proposal of the Amendments earlier this year (the “Proposal”).2 The Commission’s responses to the comments are discussed in some detail, as they provide additional guidance on questions that may arise in complying with the new requirements. We conclude with a brief “Food for Thought” section pointing to certain areas that may merit consideration as market participants navigate the changed landscape for completing and filing the Form and ponder possible future engagement as the Commission and its staff consider further improvements. A redline of significant changes against the prior Form and rules is provided as an Appendix to this Client Alert (the “Redline Appendix”).
II. Summary of Changes
The Amendments create a revised and substantially simplified Form CPO-PQR (“Revised Form CPO-PQR” or the “Revised Form”), to be filed by all reporting CPOs on a quarterly basis, regardless of size. Prior to the Amendments, both the scope of information required by the Form and the frequency of filing (quarterly or annual) were determined by the CPO’s status as a “small,” “mid-sized,” or “large” CPO, based on aggregated pool assets under management. Read More...
1 Compliance Requirements for Commodity Pool Operators on Form CPO-PQR, 85 Fed. Reg. 71,772 (Nov. 10, 2020), https://www.federalregister.gov/d/2020-22874 (the “Adopting Release”).
2 See Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR, 85 Fed. Reg. 26,378 (May 4, 2020), https://www.federalregister.gov/d/2020-08496 (the “Proposing Release”).
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