Enter to open, tab to navigate, enter to select
CFTC Exempts Small CPOs from Filing Form CPO-PQR
Practical Law Legal Update w-000-7529 (Approx. 4 pages)
CFTC Exempts Small CPOs from Filing Form CPO-PQR
by Practical Law Finance
| Published on 11 Nov 2015 • USA (National/Federal) |
The CFTC has clarified that commodity pool operators (CPOs) that qualify for an exemption from CFTC registration based on a low level of trading are also exempt from filing Form CPO-PQR as is generally required under CFTC reporting requirements for CPOs.
On November 5, 2015, The CFTC released FAQs clarifying that commodity pool operators (CPOs) that qualify for an exemption from CFTC registration based on a low level of trading are also exempt from filing Form CPO-PQR as is generally required under CFTC reporting requirements for CPOs.
This clarifies exemptive relief that the CFTC previously granted in No-Action Letter 14-115 (see Legal Update, CFTC Addresses Key CPO Issues).
Generally, all CPOs that operate at least one pool during a reporting period must complete and file a Form CPO-PQR for that reporting period (see Practice Note, The Dodd-Frank Act: Expanded "Commodity Pool" Definition and CPO/CTA Rules: Section 4.27 Reporting for CPOs and CTAs). The definition of the term "reporting period" depends on the amount of a CPO's assets under management (AUM) and means:
- For large CPOs (those with gross AUM of $5 billion or more attributable to pools as of the last fiscal quarter end), any individual calendar quarter.
- For small and mid-sized CPOs (those with gross AUM of under $5 billion attributable to pools as of the last fiscal quarter end), the calendar year.
The FAQs clarify that an entity registered with the CFTC as a CPO is not required to complete and file a Form CPO-PQR if it either:
- Did not operate a pool during the reporting period.
- Operated only pools for which the CPO was not required to be registered with the CFTC.
For example, a registered CPO is exempt from completing and filing a Form CPO-PQR if it:
- Operated only pools pursuant to the registration exemption contained in CFTC Regulation 4.13(a)(3) (17 C.F.R. 4.13(a)(3)) during the reporting period.
- Did not operate any pools during the reporting period.
The FAQs also note that another exemption is available for CPOs that file a Form PF with the SEC. Specifically, a CPO that is registered as an investment adviser (IA) with the SEC and files a Form PF with the SEC is permitted to file that form in lieu of most of Form CPO-PQR. However, the CPO must also file a Schedule A to Form CPO-PQR with the CFTC. Form PF is an SEC form on which private fund advisers report regulatory assets under management (RAUM) to the Financial Stability Oversight Council (FSOC).
The FAQs further clarify, among other things, that:
- All CPOs that operate at least one pool for which they must be registered must complete and file a Form CPO-PQR.
- If multiple CPOs operate a pool during a reporting period, each co-CPO is required to file a Form CPO-PQR. However, not every co-CPO is required to complete all of the schedules or parts of the schedules of the Form CPO-PQR. Specifically, only the co-CPO with the highest total AUM, aggregated across all pools operated by the co-CPOs, is required to fully complete Form CPO-PQR for the pool.
- A sub-advisor to an advisor, both of which are registered as commodity trading advisors (CTAs), must report separately on Form CTA-PR.
Reports filed on Form CPO-PQR must include a description for each pool under the CPO's management of, among other things, the pool’s:
- AUM.
- Use of leverage.
- Counterparty credit risk exposure.
- Trading and investment positions.