Advisories March 23, 2020

Investment Management Advisory: CFTC Issues No-Action Letter Offering Regulatory Relief for CPOs

Executive Summary
Minute Read

Our Investment Management Team outlines how the Commodity Futures Trading Commission will allow commodity pool operators to delay their reporting obligations during the coronavirus pandemic.

  • Filing form CPO-PQR under Regulation 4.27
  • Pool annual reports under Regulations 4.7(b)(4) and 4.22(c)
  • Pool periodic account statements under Regulations 4.7(b)(3) or 4.22(b)

On March 20, 2020, in response to the challenges presented by the coronavirus pandemic, the Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) issued a no-action letter offering temporary relief to commodity pool operators (CPOs) from certain obligations under the Commodity Exchange Act and CFTC regulations.

Filing Form CPO-PQR Under Regulation 4.27

Generally, CFTC Regulation 4.27 requires a registered CPO to file an annual report with the National Futures Association (NFA) (or quarterly reports, for large CPOs – those with at least $1.5 billion in aggregated pool assets under management (AUM)) on Form CPO-PQR for the directed assets of each pool under the advisement of the CPO.

Pursuant to the no-action letter, the DSIO will not recommend an enforcement action against small or mid-sized CPOs (CPOs with less than $1.5 billion in aggregated pool AUM) that fail to timely file a report on Form CPO-PQR, as long as they file their reports by May 15, 2020. Further, the DSIO will not recommend enforcement against large CPOs that fail to timely file a quarterly report on Form CPO-PQR for Q1 2020, as long as they file by July 15, 2020.

Pool Annual Reports Under Commission Regulations 4.7(b)(4)and 4.22(c)


CFTC Regulation 4.7(b)(4) requires a registered CPO to distribute an annual report to pool participants within 90 calendar days of the applicable exempt pool’s fiscal year-end. CFTC Regulation 4.22(c) requires a registered CPO to distribute an annual report to pool participants within 90 days of the applicable pool’s fiscal year-end.

Pursuant to the no-action letter, the DSIO will not recommend an enforcement action against a CPO that fails to timely file a pool annual report that is due on or before April 30, 2020, provided that the annual certified financial statements for the CPO’s operated commodity pools are filed with the NFA and distributed to pool participants no later than 45 days after the due date for the reports. A CPO may request an additional extension of up to 180 days from the end of a pool’s fiscal year, pursuant to CFTC Regulation 4.22(f).

Pool Periodic Account Statements Under Commission Regulation 4.7(b)(3)2 or 4.22(b)

CFTC Regulation 4.7(b)(3) requires a registered CPO to distribute a quarterly report to all pool participants within 30 calendar days of the applicable exempt pool’s fiscal year-end, provided that the quarterly report is not required to be filed if a CPO’s annual report is distributed to the pool participants within 45 days of the exempt pool’s fiscal year-end. CFTC Regulation 4.22(b) requires a registered CPO to distribute a monthly report (for a pool with net assets exceeding $500,000) or quarterly report (for a pool with net assets of $500,000 or less) to all pool participants within 30 calendar days after the last date of the applicable reporting period, provided that the monthly or quarterly report is not required to be filed if a CPO’s annual report is distributed to the pool participants within 45 days of the pool’s fiscal year-end.

Pursuant to the no-action letter, the DSIO will not recommend an enforcement action against a CPO that fails to timely file a monthly or quarterly report for periods ending on or before April 30, 2020, provided that the statements are distributed to the pool participants within 45 days of the end of the reporting period for all reporting periods.


Alston & Bird has formed a multidisciplinary task force to advise clients on the business and legal implications of the coronavirus (COVID-19). You can view all our work on the coronavirus across industries and subscribe to our future webinars and advisories.

 


 

 The no-action letter erroneously references CFTC Regulation 4.7(b)(3). The correct reference for the annual reporting requirement is CFTC Regulation 4.7(b)(4).

The no-action letter erroneously references CFTC Regulation 4.7(b)(2). The correct reference for the periodic reportingrequirement is CFTC Regulation 4.7(b)(3).

 

 

Media Contact
Nicholas Clarke
Senior Communications Manager
Phone: 212.210.1222

This website uses cookies to improve functionality and performance. For more information, see our Privacy Statement. Additional details for California consumers can be found here.