CFTC Allows Registered Funds to Rely on SEC Compliance
The Commodity Futures Trading Commission has adopted a rule that allows registered investment companies that must also register as commodity pool operators to rely on SEC compliance for all disclosure, reporting and recordkeeping requirements. The CFTC has not withdrawn the registration requirement for firms that manage registered funds with certain levels of derivatives exposure. To utilize the substitute compliance regime, a fund manager must file a notice with the NFA, file its financial statements with the NFA, and notify the NFA if it intends to use third-party service providers for recordkeeping. Also, fund managers of funds with less than 3 years of operating history must disclose performance information of all similar accounts.
OUR TAKE: This is great news for registered investment companies. Although they must register as commodity pool operators, they will not have significant additional compliance responsibilities. What’s the point of all this? The CFTC can assert its regulatory supervision in the event that it feels that the SEC has not done enough.