On December 12th, the U.S. District Court upheld the CFTC's rules requiring SEC-registered investment companies which engage in more than a de minimis level of derivatives trading to register with the CFTC as commodity pool operators. The Court found that the CFTC's rulemaking was neither arbitrary nor capricious and that its analysis adequately weighed the rule's costs and benefits. Investment Company Institute v. CFTC. Section 4.5 of the CFTC's rule requires investment companies to register with the CFTC if the investment company's derivatives trading exceeds five percent of the liquidation value of its portfolio. Included within that five percent threshold are all swaps, futures, and risk management hedging activities. The CFTC does provide for an alternative threshold based on a net notional test. Under the net notional test, entities may claim a registration exemption if the aggregate net notional value of the entity's commodity interest positions does not exceed 100 percent of the liquidation value of the commodity pool's portfolio. See Blogmosaic.