On August 13, 2013, the Commodity Futures Trading Commission issued its final rules (“Final Rules”) applicable to registered investment companies now required to dually register as commodity pool operators (“Dually-Registered CPOs”) as a result of changes made to CFTC Regulation 4.5 finalized in February 2012 (as described in a Katten Client Advisory of February 22, 2012). The CFTC adopted the Final Rule to harmonize CFTC and Securities and Exchange Commission regulatory requirements applicable to Dually-Registered CPOs by permitting them to comply with the SEC requirements relating to disclosure, reporting and recordkeeping applicable to registered investment companies and their advisers (“SEC Regulatory Regime”) in lieu of compliance with substantially all of the CFTC’s relevant Part 4 regulations (“Part 4 Regulations”). The Final Rules reflect the CFTC’s conclusion that compliance with the regulatory objectives in its Part 4 Regulations largely can be accomplished by compliance with the SEC Regulatory Regime.
The Final Rules also amend certain provisions of Part 4 Regulations that will be applicable to all commodity pool operators and commodity trading advisers, including those relating to (i) signed acknowledgements to evidence receipt of disclosure documents, (ii) disclosure document updating time periods and (iii) third-party service providers for books and records.
The use of the SEC Regulatory Regime in substituted compliance with Part 4 Regulations is not automatic, but elective. Therefore, a Dually-Registered CPO electing to comply with the SEC Regulatory Regime must file a notice with the NFA. Certain of the Final Rules’ requirements will become effective immediately upon their publication in the Federal Register, while others will become effective 30 days after such publication.