I. Introduction and Executive Summary
At an open meeting held on June 4, 2020, the Commodity Futures Trading Commission (the “CFTC” or the “Commission”) unanimously adopted amendments to Rule 4.13, the Commission’s rule providing a number of commodity pool operator (“CPO”) registration exemptions for persons engaged in certain limited CPO activities, that impose an important new condition.1 The amendments require a person claiming a CPO exemption under Rules 4.13(a)(1), (2), (3), or (5) (the “Covered Exemptions”) to represent that “neither the person nor any of its principals has in its background a statutory disqualification that would require disclosure under section 8a(2) of the [Commodity Exchange] Act if such person sought registration,” with a limited exception for matters previously disclosed in an application for registration that was granted (the “Section 8a(2) Representation”). This requirement is imposed under a new paragraph (b)(1)(iii) of Rule 4.13, which effectively acts to bar persons that have a Section 8a(2) statutory disqualification in their background, or whose principals do, from relying on a Covered Exemption, unless the limited exception is available or the person obtains an individual exemption (the “Section 8a(2) Bar”). The amendments finalize a proposal published in October of 2018 (the “Proposal”), with significant changes made in response to concerns raised by commenters on the Proposal.2
The amendments (the “Final Rule”) became effective on September 8, 2020. However, the Commission extended the compliance date for CPOs with existing claims filed under one of the Covered Exemptions; such CPOs may continue to rely on these existing claims until March 1, 2021, the date for annual reaffirmation of reliance on the Exemptions.3 Read More...
1 Registration and Compliance Requirements for Commodity Pool Operators and Commodity Trading Advisors: Prohibiting Exemptions Under Regulation 4.13 on Behalf of Persons Subject to Certain Statutory Disqualifications, 85 Fed. Reg. 40,877 (July 8, 2020), https://www.federalregister.gov/d/2020-12607 (the “Adopting Release”).
2 Registration and Compliance Requirements for Commodity Pool Operators and Commodity Trading Advisors, 83 Fed. Reg. 52,902 (Oct. 18, 2018), https://www.federalregister.gov/d/2018-22324. (the “Proposing Release”).
3 Adopting Release at 40,877.
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