As part of the CFTC Reauthorization Bill, the House included a proposed amendment to CFTC Rule 4.5, which would expand the exemption from CPO registration to include investment advisers to registered investment companies (RICs) that only trade “financial commodities,” as opposed to commodity interests derived from agricultural or natural resources. The proposed amendment is in response to the CFTC’s previous changes to CFTC Rule 4.5 in 2012.
Prior to 2012, investment advisers to RICs were exempt from registration pursuant to CFTC Rule 4.5. In 2012, the CFTC amended CFTC Rule 4.5 to limit the use of its exemption to those investment advisers to RICs whose commodities interests were a de minimis amount. As a result of the 2012 amendments, many investment advisers were required to register as CPO and thus become subject to the jurisdiction of both the SEC and the CFTC. In 2013, the CFTC adopted rules which were intended to harmonize disclosure requirements between the SEC and the CFTC, but nevertheless, affected investment advisers are still required to register as CPOs and comply with other CFTC requirements. The CFTC Reauthorization Bill containing the proposed amendment was recently approved by the House and now is in the Senate for review.