NFA and the Alternative Investment Management Association ("AIMA") reacted to the CFTC's proposed amendments to CFTC Rule 4.27 ("Additional Reporting by Commodity Pool Operators and Commodity Trading Advisors") and Form CPO-PQR. As previously covered, the proposed amendments would modify the collection of data from certain registered CPOs to improve agency oversight of CPOs.
NFA Comment Letter
NFA supported the CFTC's proposal to amend the Form CPO-PQR Schedule of Investments to align it with the more streamlined 2010 version of NFA's schedule to Form PQR. NFA noted that, although Form CPO-PQR's current schedule collects more granular information than NFA's 2010 schedule, the CFTC has additional tools to obtain the information necessary "to effectively oversee and assess the impact of CPOs and their pools in the commodity interest markets."
NFA opposed CFTC's proposal to allow CPOs that are dually registered with the CFTC and the SEC to file SEC Form PF with NFA in lieu of Form CPO-PQR, stating that SEC Form PF contains "significantly more information than NFA needs." NFA also asserted that such an alternative filing obligation would have limited benefits to dually registered CPOs because (i) the information requested in SEC Form PF is "at least as burdensome as" the information requested in Form CPO-PQR and (ii) NFA would continue to require CPOs to file NFA Form PQR.
Additionally, NFA identified reporting instructions that it believes the CFTC should review for consistency with any final rule amendments.
AIMA Comment Letter
AIMA supported CFTC efforts to reduce the reporting obligations for dually registered CPOs, but urged the CFTC to allow the submission of SEC Form PF to fully satisfy the CFTC/NFA reporting obligations. AIMA noted the SEC's and CFTC's "overlapping reporting burdens," and stated that: "there is generally a strong preference for there not to be incremental and non-transformative change due to the additional cost of adjusting systems. This is heightened by members' general perception of systemic risk reporting consuming substantial resources while producing limited tangible benefit to regulators or the marketplace."
Commentary Steven Lofchie
In its comment letter, AIMA expressed skepticism on the value of the collected data. That sentiment is warranted. Rather than making incremental changes to the reporting requirements, the CFTC/NFA and SEC should assess whether there is any benefit in continuing, and, if so, on scaling back the requirements consistent with the value provided by the data.
Originally published June 15, 2020.
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