Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR, 26378-26413 [2020-08496]
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Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Proposed Rules
overhaul or within 5 years after the effective
date of this AD, whichever occurs first.
(iii) If, on the effective date of this AD, the
fuel solenoid valve assembly has 3,000 or
more engine cycles since last overhaul,
perform the inspection before exceeding 500
engine cycles or within 5 years after the
effective date of this AD, whichever occurs
first.
(2) Thereafter, repeat the visual inspection
of the overspeed fuel solenoid valve
assembly, fuel filter outlet, and adjacent fuel
system tube assemblies at intervals not to
exceed 3,000 engine cycles since the last
visual inspection using the Accomplishment
Instructions, paragraphs 3.B.(1) to (3), of
Honeywell ASB ALF/LF–72–1120.
(3) If, based on the visual inspection
required by paragraph (g)(1) or (2) of this AD,
an overspeed fuel solenoid valve assembly is
rejected for visual coking or varnish residue,
as depicted in the Accomplishment
Instructions, paragraph 3.B.(3) of Honeywell
ASB ALF/LF–72–1120, before further flight:
(i) Remove and inspect the adjacent fuel
system tube assemblies using the
Accomplishment Instructions, paragraph
3.B.(3) of Honeywell ASB ALF/LF–72–1120.
(ii) Overhaul the overspeed fuel solenoid
valve assembly or replace it with a part
eligible for installation using the
Accomplishment Instructions, paragraphs
3.B.(5) to (8), of Honeywell ASB ALF/LF–72–
1120.
Note to paragraph (g)(3)(ii): Valves may be
serviced at any appropriately rated, FAAapproved repair facility.
(4) At the next engine shop visit after the
effective date of this AD, and each shop visit
thereafter, if the overspeed fuel solenoid
valve assembly time since new or since last
overhaul, whichever is less, exceeds 8,000
engine cycles or is unknown, overhaul the
overspeed fuel solenoid valve assembly in
accordance with the applicable Honeywell
Temporary Revision (TR) for the engine, as
defined in paragraphs (h)(1) through (4).
(j) Alternative Methods of Compliance
(AMOCs)
(1) The Manager, Los Angeles ACO Branch,
FAA, has the authority to approve AMOCs
for this AD, if requested using the procedures
found in 14 CFR 39.19. In accordance with
14 CFR 39.19, send your request to your
principal inspector or local Flight Standards
District Office, as appropriate. If sending
information directly to the manager of the
certification office, send it to the attention of
the person identified in paragraph (k)(1) of
this AD. Information may be emailed to: 9ANM-LAACO-AMOC-Requests@faa.gov.
(2) Before using any approved AMOC,
notify your appropriate principal inspector,
or lacking a principal inspector, the manager
of the local flight standards district office/
certificate holding district office.
(h) Definition
COMMODITY FUTURES TRADING
COMMISSION
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For the purpose of this AD, the ‘‘applicable
Honeywell TR’’ refers, depending on the
affected engine model, to the following
engine model TRs:
(1) Honeywell TR No. 72–1022, dated
October 14, 2019, for Honeywell ALF502R
model engines;
(2) Honeywell TR No. 72–202, dated
October 10, 2019, for Honeywell LF507–1F
model engines;
(3) Honeywell TR No. 72–177, dated
October 10, 2019, for Honeywell LF507–1H
model engines; or
(4) Honeywell TR No. 72–57, dated
October 29, 2019, for Honeywell ALF502L
model engines.
(i) Credit for Previous Actions
You may take credit for the initial visual
inspection and replacement required by
paragraph (g)(1) to (3) of this AD if the
inspection was performed using the
Accomplishment Instructions, paragraphs
3.B.(1) to (2) or 3.B.(6), of Honeywell ASB
ALF/LF–72–1120, Revision 0, dated August
30, 2019.
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(k) Related Information
(1) For more information about this AD,
contact Mark Matzke, Aerospace Engineer,
Los Angeles ACO Branch, FAA, 3960
Paramount Boulevard, Lakewood, CA 90712–
4137; phone: 562–627–5312; fax: 562–627–
5210; email: mark.matzke@faa.gov.
(2) For service information identified in
this AD, contact Honeywell International
Inc., 111 S. 34th Street, Phoenix, Arizona
85034–2802, United States; phone: 800–601–
3099; website: https://
aerospace.honeywell.com/en#/. You may
view this referenced service information at
the FAA, Airworthiness Products Section,
Operational Safety Branch, 1200 District
Avenue, Burlington, MA 01803. For
information on the availability of this
material at the FAA, call 781–238–7759.
Issued on April 28, 2020.
Lance T. Gant,
Director, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2020–09287 Filed 5–1–20; 8:45 am]
BILLING CODE 4910–13–P
17 CFR Part 4
RIN 3038–AE98
Amendments to Compliance
Requirements for Commodity Pool
Operators on Form CPO–PQR
Commodity Futures Trading
Commission.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Commodity Futures
Trading Commission (CFTC or
Commission) is proposing amendments
to agency regulations on Commodity
Pool Operators. Specifically, the
proposal would eliminate the poolspecific reporting requirements in
existing Schedules B and C of Form
CPO–PQR, other than the pool schedule
of investments, and amend the
information in existing Schedule A of
SUMMARY:
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the form to request Legal Entity
Identifiers (LEIs) for commodity pool
operators (CPOs) and their operated
pools that have them, and to eliminate
questions regarding pool auditors and
marketers. All CPOs would be required
to file the resulting amended Form
CPO–PQR quarterly, but would also be
allowed to file NFA Form PQR, a
comparable form required by the
National Futures Association (NFA), in
lieu of filing the revised Form CPO–
PQR. Relatedly, the Commission would
also no longer accept filing Form PF in
lieu of the revised Form CPO–PQR. The
Commission preliminarily believes that
these amendments would focus Form
CPO–PQR on data elements that
facilitate the Commission’s oversight of
CPOs and their pools in connection
with its use of other Commission data
streams and regulatory initiatives while
reducing overall data collection
requirements for market participants.
DATES: Comments must be received on
or before June 15, 2020.
ADDRESSES: You may submit comments,
identified by RIN number 3038–AE98,
by any of the following methods:
• CFTC Comments Portal: https://
comments.cftc.gov. Select the ‘‘Submit
Comments’’ link for this rulemaking and
follow the instructions on the Public
Comment Form.
• Mail: Christopher Kirkpatrick,
Secretary of the Commission,
Commodity Futures Trading
Commission, Three Lafayette Centre,
1155 21st Street NW, Washington, DC
20581.
• Hand Delivery/Courier: Follow the
same instructions as for Mail, above.
Please submit your comments using
only one of these methods. Submissions
through the CFTC Comments Portal are
encouraged.
All comments must be submitted in
English, or if not, accompanied by an
English translation. Comments will be
posted as received to https://
comments.cftc.gov. You should submit
only information that you wish to make
available publicly. If you wish the
Commission to consider information
that you believe is exempt from
disclosure under the Freedom of
Information Act (FOIA), a petition for
confidential treatment of the exempt
information may be submitted according
to the procedures established in
Commission Regulation 145.9.1
The Commission reserves the right,
but shall have no obligation, to review,
pre-screen, filter, redact, refuse or
remove any or all of your submission
from https://comments.cftc.gov that it
1 17 CFR 145.9. The Commission’s regulations are
found at 17 CFR Ch. I (2019).
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Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Proposed Rules
may deem to be inappropriate for
publication, such as obscene language.
All submissions that have been redacted
or removed that contain comments on
the merits of the rulemaking will be
retained in the public comment file and
will be considered as required under the
Administrative Procedure Act and other
applicable laws, and may be accessible
under the FOIA.
FOR FURTHER INFORMATION CONTACT:
Joshua B. Sterling, Director, at 202–418–
6700 or jsterling@cftc.gov; Amanda
Lesher Olear, Deputy Director, at 202–
418–5283 or aolear@cftc.gov; Division
of Swap Dealer and Intermediary
Oversight, Commodity Futures Trading
Commission, Three Lafayette Centre,
1151 21st Street NW, Washington, DC
20581.
SUPPLEMENTARY INFORMATION:
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I. Introduction
Section 1a(11) of the Commodity
Exchange Act (CEA or the Act) 2 defines
the term ‘‘commodity pool operator’’
(CPO), as any person 3 engaged in a
business that is of the nature of a
commodity pool, investment trust,
syndicate, or similar form of enterprise,
and who, with respect to that
commodity pool, solicits, accepts, or
receives from others, funds, securities,
or property, either directly or through
capital contributions, the sale of stock or
other forms of securities, or otherwise,
for the purpose of trading in commodity
interests.4 CEA section 4m generally
requires each person who satisfies the
CPO definition to register as such with
the Commission.5 CEA section 4n
requires registered CPOs to maintain
books and records and file such reports
in such form and manner as may be
prescribed by the Commission.6
In 2010, the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act) 7 amended the
Investment Advisers Act of 1940
(Advisers Act) 8 to require advisers to
large private funds 9 to register with the
2 7 U.S.C. 1, et seq. (2019). The Act is accessible
through the Commission’s website, https://
www.cftc.gov.
3 See 17 CFR 1.3 (defining ‘‘person’’ to include
individuals, associations, partnerships,
corporations, and trusts).
4 7 U.S.C. 1a(11).
5 7 U.S.C. 6m(1).
6 7 U.S.C. 6n(3)(A). Registered CPOs have
regulatory reporting obligations with respect to
their operated pools. See 17 CFR. 4.22.
7 Public Law 111–203, 124 Stat. 1376 (2010).
8 15 U.S.C. 80b–1 et seq. (2019).
9 Section 202(a)(29) of the Advisers Act defines
the term ‘‘private fund’’ as ‘‘an issuer that would
be an investment company, as defined in section 3
of the Investment Company Act of 1940 (15 U.S.C.
80a–3), but for section 3(c)(1) or 3(c)(7) of that Act.’’
See 15 U.S.C. 80ab–2(a)(29).
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Securities and Exchange Commission.
(SEC).10 Congress further directed the
SEC to adopt rules requiring registered
private fund advisers 11 to file reports
containing such information as is
deemed necessary and appropriate in
the public interest and for investor
protection and for the assessment of
systemic risk.12 Pursuant to section 204
of the Advisers Act, as amended, those
records and reports must include,
among other things, a description of the
amount of assets under management,
use of leverage, counterparty credit risk
exposure, and trading and investment
positions for each private fund advised
by the adviser.13 These records and
reports must also be made available to
the Financial Stability Oversight
Counsel (FSOC).14 Through these
requirements, Congress sought to make
available to the SEC and FSOC
information regarding the size,
strategies, and positions of large private
funds, which Congress believed could
be crucial to regulatory attempts to deal
with a future crisis.15
Pursuant to Advisers Act section 211,
as amended, rules establishing the form
and content of reports filed by private
fund advisers that are dually registered
with the SEC and the CFTC (together,
the Commissions) must be promulgated
jointly by both agencies after
consultation with FSOC.16 Accordingly,
in 2011 the Commissions jointly
adopted sections 1 and 2 of Form PF.17
10 See Dodd-Frank Act section 403 of the
(amending Advisers Act 203(b), 15 U.S.C. 80b–3(b),
to incorporate private fund adviser registration);
Dodd-Frank Act sections 402, 407, 408 (establishing
certain exemptions from private fund adviser
registration); Advisers Act section 202(a)(29), 15
U.S.C. 80a–3 (defining ‘‘private fund’’).
11 As used in this release, the term ‘‘private fund
adviser’’ refers to any investment adviser that is: (i)
Registered or required to be registered with the SEC
(including any investment adviser that is also
registered or required to be registered with the
CFTC as a CPO or CTA); and (ii) advises one or
more private funds (including any commodity pools
that satisfy the definition of ‘‘private fund’’).
12 See Dodd-Frank Act section 404; Advisers Act
section 204, 15 U.S.C. 80b–4(b)(5). See also 15
U.S.C. 80b–4(b)(1) (authorizing the SEC to require
each investment adviser to a private fund to file
reports containing such information as the SEC
deems necessary and appropriate in the public
interest or for the protection of investors or for the
assessment of systemic risk by the Financial
Stability Oversight Council).
13 15 U.S.C. 80b–4(b)(3).
14 15 U.S.C. 80b–4(b)(7).
15 Commodity Pool Operators and Commodity
Trading Advisors: Amendments to Compliance
Obligations, 76 FR 7976, 7977 (Form CPO–PQR
Proposal) (Feb. 11, 2011) (citing S. Conf. Rep. No.
111–176, at 38 (2010)).
16 15 U.S.C. 80b–11(e).
17 See Reporting by Investment Advisers to
Private Funds and Certain Commodity Pool
Operators and Commodity Trading Advisors on
Form PF, 76 FR 71128 (Nov. 16, 2011) (Form PF
Final Rule). Sections 3 and 4 of Form PF were
adopted solely by the SEC. Id.
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26379
In adopting Form PF, the Commissions
stated that the form was designed to
provide FSOC empirical data from
which it may make a determination
about the extent to which the activities
of private funds or their advisers pose
systemic risk.18 The SEC added that the
policy judgements implicit in the Form
PF reporting requirements reflected
FSOC’s role as the primary user of the
reported information and that the SEC
would not necessarily have required the
same scope of reporting if the
information reported on Form PF were
intended solely for the SEC’s use.19
Following the adoption of Form PF,
and on its own initiative, the
Commission adopted its own new
reporting requirement for CPOs: Form
CPO–PQR and § 4.27, which requires
certain CPOs to report on Form CPO–
PQR.20 The Commission proposed this
new reporting requirement after
reevaluating its regulatory approach to
CPOs in light of the 2008 financial crisis
and the purposes and goals of the DoddFrank Act so as to determine the
necessary level of regulation in the thencurrent economic environment. The
amendments to Part 4, including this
new reporting requirement, were
intended to: (1) Align the Commission’s
regulatory structure for CPOs with the
purposes of the Dodd-Frank Act; (2)
encourage more congruent and
consistent regulation of similarly
situated entities among Federal
financial regulatory agencies, such as
dually registered CPOs required to file
Form PF; (3) improve accountability and
increase transparency of the activities of
CPOs and the commodity pools that
they operate or advise; and (4) facilitate
a data collection that would potentially
assist FSOC.21 To that end, the
requirements of Form CPO–PQR were
modeled closely after those of Form
PF.22
In adopting Form CPO–PQR, the
Commission indicated that the collected
data would be used for several broad
purposes, including: Increasing the
Commission’s understanding of its
registrant population; assessing the
market risk associated with pooled
18 Id.
at 71129.
at 71129–30.
20 See Commodity Pool Operators and
Commodity Trading Advisors: Compliance
Obligations, 77 FR 11252 (Feb. 24, 2012) (Form
CPO–PQR Final Rule); 17 CFR pt. 4 app. A; 17 CFR
4.27.
21 Form CPO–PQR Proposal, 76 FR at 7978.
22 Id. at 7978 (‘‘The Commission proposes [Form
CPO–PQR] to solicit information that is generally
identical to that sought through Form PF . . .’’).
Section 4.27 further provides for the filing of Form
PF in lieu of Commission filing requirements (i.e.,
Form CPO–PQR) for CPOs that are dually registered
with the SEC. See 17 CFR 4.27(d).
19 Id.
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Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Proposed Rules
investment vehicles under its
jurisdiction; and monitoring for
systemic risk.23 Specifically, the
Commission was interested in receiving
information regarding the operations of
CPOs and their pools, including their
participation in commodity interest
markets, their relationships with
intermediaries, and their
interconnectedness with the financial
system at large.24 In proposing the
majority of the more pool-specific
questions in the form in particular, the
Commission believed the incoming data
would assist the Commission in
monitoring commodity pools in such a
way as to allow the Commission to
identify trends over time, including a
pool’s exposure to asset classes, the
composition and liquidity of a
commodity pool’s portfolio, and a pool’s
susceptibility to failure in times of
stress.25 Although the Commission
recognized that the data had some
limitations, it believed that, in light of
the 2008 financial crisis and the sources
of risk delineated in the Dodd-Frank Act
with respect to private funds, the
detailed, pool-specific information to be
provided in Form CPO–PQR was
necessary and appropriately balanced to
assess the risks posed by a pool or a
CPO’s operations as a whole.26
After seven years of experience with
Form CPO–PQR, the Commission is
reassessing the scope of Form CPO–PQR
and how it aligns with the
Commission’s current regulatory
priorities. The Commission’s ability to
make full use of the more detailed
information collected under Form CPO–
PQR has not met the Commission’s
initial expectations. At the same time,
however, the Commission has devoted
substantial resources to developing
other data streams and regulatory
initiatives designed to enhance its
ability to broadly surveil financial
markets for risk posed by all manner of
market participants, including CPOs
and their operated pools.
Under these circumstances, and as
further explained in discussion that
follows, the Commission preliminarily
believes that Form CPO–PQR could be
revised in a way that would support the
Commission’s ability to exercise its
oversight of CPOs and their operated
pools while reducing reporting burdens
for market participants, thereby further
promoting the integrity, resilience, and
vibrancy of the U.S. derivatives markets.
23 See
Form CPO–PQR Final Rule, 77 FR 11252.
at 11266.
25 Form CPO–PQR Proposal, 76 FR at 7981.
26 Id.
24 Id.
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II. Overview of Current Form CPO–PQR
The amount of information that a CPO
is currently required to disclose on
Form CPO–PQR varies depending on
the size of the operator and the size of
the operated pools.27 The form
identifies three classes of filers: Large
CPOs, Mid-Sized CPOs, and Small
CPOs. The thresholds for determining
Large and Mid-Sized CPOs generally
align with those in Form PF: 28 A Large
CPO is a CPO that had at least $1.5
billion in aggregated pool assets under
management (AUM) 29 as of the close of
business on any day during the
reporting period; a Mid-Sized CPO is a
CPO that had at least $150 million, but
less than $1.5 billion, in aggregated pool
AUM as of the close of business on any
day during the reporting period.
Although not defined in Form CPO–
PQR, ‘‘Small CPO,’’ as used herein,
refers to a CPO that is not a Large CPO
or a Mid-Sized CPO, i.e., a CPO that had
less than $150 million in aggregated
pool AUM during the entire reporting
period. The reporting period for Large
CPOs is any of the individual calendar
quarters (ending March 31, June 30,
September 30, and December 31); for
Small and Mid-Sized CPOs, the
reporting period is the calendar yearend.
Form CPO–PQR consists of three
schedules: Schedules A, B, and C.
Schedule A requires all CPOs to
disclose basic identifying information
about the CPO (Part 1) and about each
of the CPO’s pools and the service
providers they used (Part 2). Large CPOs
submit Schedule A on a quarterly basis;
all other CPOs submit it annually.
Schedule B requires additional detailed
information for each pool operated by
Mid-Sized and Large CPOs regarding
each pool’s investment strategy;
borrowings and types of creditors;
counterparty credit exposure; trading
and clearing mechanisms; value of
aggregated derivative positions; and a
schedule of investments. Large CPOs
submit Schedule B on a quarterly basis,
whereas Mid-Sized CPOs submit it
annually.
Schedule C requires further detailed
information about the pools operated by
Large CPOs on an aggregate and pool27 See
17 CFR pt. 4 app. A.
Instructions to Form PF, available at https://
www.sec.gov/about/forms/formpf.pdf. Private fund
investment advisers with ‘‘regulatory AUM,’’ as that
term is defined in Form PF, of at least $150 million
are required to file Section 1 of Form PF; private
fund investment advisers with regulatory AUM
equal to or exceeding $1.5 billion are required to
file Sections 1 and 2 of Form PF. Id.
29 AUM refers to the amount of all assets that are
under the control of the CPO. See 17 CFR pt. 4 app.
A.
28 See
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by-pool basis. Part 1 of Schedule C
requires aggregate information for all
pools operated by a Large CPO,
including (1) a geographical breakdown
of the pools’ investment on an
aggregated basis and (2) the turnover
rate of aggregate portfolio of pools. Part
2 of Schedule C requires certain detailed
information for each Large Pool the
Large CPO operates, where a ‘‘Large
Pool’’ is defined as a commodity pool
that has a net asset value (NAV) 30
individually, or in combination with
any parallel pool structure,31 of at least
$500 million as of the close of business
on any day during the reporting
period.32 Specifically, Part 2 requires
information with respect to each Large
Pool the Large CPO operates during the
given reporting period, including
information regarding the Large Pool’s:
(1) Identity; (2) liquidity; (3)
counterparty credit exposure; (4) risk
metrics; (5) borrowing; (6) derivative
positions and posted collateral; (7)
financing liquidity; (8) participant
information; and (9) the duration of its
fixed income assets. Large CPOs submit
Schedule C on a quarterly basis and a
separate Part 2 of Schedule C on a
quarterly basis for each Large Pool they
operate during the reporting period.
If a CPO is dually registered with the
SEC as an Investment Adviser and is
required to file Form PF regarding its
advisory services to private funds 33
during the reporting period, the CPO is
deemed to have satisfied its Schedule B
and Schedule C filing requirements by
completing and filing certain questions
in Form PF.34
In addition to Form PF and Form
CPO–PQR, in 2010 NFA implemented
its form PQR (NFA Form PQR) to elicit
data in support of a risk-based
examination program for CPOs.35
Pursuant to NFA Rule 2–46, all CPO
NFA members, which include all CPOs
registered with the Commission, must
file NFA Form PQR on a quarterly
basis.36 By rule, NFA accepts the filing
of Form CPO–PQR, but not Form PF, in
lieu of filing its form for any quarter in
which a Form CPO–PQR filing is
30 The term ‘‘net asset value’’ has the same
meaning as in Commission regulation at § 4.10(b).
See id.
31 The term ‘‘parallel pool structure’’ means any
structure in which one or more pools pursues
substantially the same investment objective and
strategy and invests side by side in substantially the
same assets as another pool. See id.
32 Id.
33 The term ‘‘private fund’’ has the same meaning
as the definition of ‘‘private fund’’ in Form PF. 17
CFR pt. 4, app. A.
34 See id.
35 NFA Rule 2–46 (2010).
36 Id. All registered CPOs are required to be NFA
members pursuant to 17 CFR 170.17.
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Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Proposed Rules
required under § 4.27. As such, duallyregistered CPOs that file Form PF in lieu
of a Form CPO–PQR filing are currently
required to file NFA Form PQR with
NFA quarterly.
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III. Proposed Regulations
As indicated above, the Commission
is proposing amendments to Form CPO–
PQR that would reduce the amount of
reporting required thereunder while still
supporting the Commission’s ability to
oversee the activities of CPOs and their
operated pools. Specifically, the
proposal would eliminate the poolspecific information currently required
to be reported in Schedules B or C of the
form, with the exception of the pool
schedule of investments (question 6 of
Schedule B). The information required
in current Schedule A would remain
with a few amendments, notably the
addition of questions regarding LEIs.
The retained reporting requirements—
the reporting requirements in current
Schedule A, as proposed to be amended,
plus the schedule of investments from
Schedule B—would be combined to
form the entirety of Form CPO–PQR,
referred to herein as ‘‘Revised Form
CPO–PQR.’’ The proposal would require
all CPOs to file Revised Form CPO–PQR
on a quarterly basis, but would permit
CPOs to file a comparable form required
by NFA, NFA Form PQR, in lieu of
Revised Form CPO–PQR. As a corollary,
the Commission would also revise
§ 4.27(d) to eliminate the ability of
dually regulated CPOs that are required
to file Form PF with respect to one or
more of their operated private funds to
file Form PF in lieu of filing current
Form CPO–PQR, while retaining Form
PF as the Commission’s form. The
sections that follow explain these
proposed changes in further detail.
A. Elimination of Pool-Specific
Reporting Requirements in Schedules B
and C
As mentioned above, the Commission
is proposing to eliminate the majority of
the information required to be reported
in current Schedules B and C of Form
CPO–PQR. The eliminated data
elements include detailed, pool-specific
information, provided on both the
individual and aggregate level, such as
questions about investment strategy and
counterparty credit exposure, asset
liquidity and concentration of positions,
clearing relationships, risk metrics,
financing, and investor composition.
In adopting Form CPO–PQR, the
Commission was interested in receiving
information regarding the operations of
CPOs and their operated pools,
including their participation in
commodity interest markets, their
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relationships with intermediaries, and
their interconnectedness with the
financial system at large.37 In proposing
the majority of the elements in
Schedules B and C in particular, the
Commission believed they would assist
the Commission in monitoring
commodity pools in such a way as to
allow the Commission to identify trends
over time, including a pool’s exposure
to asset classes, the composition and
liquidity of a commodity pool’s
portfolio, and a pool’s susceptibility to
failure in times of stress.38
After seven years of experience with
Form CPO–PQR, however, the
Commission acknowledges that
challenges with the data collected in
Schedules B and C, combined with
resource constraints in the face of
broader Commission priorities, have
frustrated the Commission’s ability to
fully realize that vision. To begin, in an
effort to take into account the different
ways CPOs maintain information, the
Commission allowed CPOs flexibility in
how they calculated and presented
certain of the data elements.39 For
example, Form CPO–PQR gives Large
CPOs the option of reporting the
duration, weighted average tenor, or 10year equivalents of fixed income
portfolio holdings, understanding that
Large CPOs may use a wide range of
metrics to measure interest rate
sensitivity. As a result, the
Commission’s ability to identify trends
across CPOs or pools using Form CPO–
PQR data has been substantially
challenged.
Additionally, taking into account the
volume and complexity of the data it
was requesting, the Commission
determined not to require the data to be
provided in real-time but rather only
mandated post hoc quarterly or annual
filings. The Commission acknowledged
the limitations of this filing schedule at
the time but also recognized the time it
would take to produce the requested
information and concluded that Form
CPO–PQR struck an appropriate balance
in addressing the Commission’s need for
timely information and providing CPOs
sufficient time to prepare it.40 As the
Commission has reviewed the data over
the years, however, it has become
apparent that the infrequent and
delayed nature of such reporting has
made it difficult to assess the impact of
CPOs and their operated pools on
markets as conditions and that relative
CPO risk profiles may have changed,
potentially significantly, by the time
37 Form
CPO–PQR Final Rule, 77 FR at 11266.
CPO–PQR Proposal, 76 FR at 7981.
39 Form CPO–PQR Final Rule, 77 FR at 11271.
40 Id. at 11267.
38 Form
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Form CPO PQR is filed with the
Commission.
Part of the Commission’s rationale for
promulgating Schedules B and C was a
need for additional information about
CPOs that are non-dual registrants to
‘‘identify significant risk to the stability
of the derivatives market and the
financial market as a whole.’’ 41 In
making the assessment that the
information then available about the
operations of CPOs and their operated
firms was insufficient, the Commission
focused primarily on the limited data
that it received under other provisions
of Part 4, such as the annual pool
financial statements under § 4.22, which
it believed was not well suited for the
stated purpose of identifying risk to the
either stability of the derivatives
markets or the financial markets in
general.42 Moreover, the Commission
did not at the time believe that it had
the capability to use that information to
assess the relationship between a large
position held by a pool and the rest of
the pool’s other derivatives positions
and securities investments.43
However, in the ten years since the
Dodd-Frank Act was passed, the
Commission has devoted significant
resources to regulatory initiatives and
data streams designed to enhance the
Commission’s ability to broadly surveil
financial markets for risk posed by all
manner of market participants,
including CPOs. These data streams
include extensive information related to
trading, reporting, and clearing of
swaps. Notably, the Commission has
developed a regime requiring the
reporting of detailed swap transaction
information to swap data repositories
(SDRs), including for those transactions
entered into by CPOs and the pools they
operate.44 Specifically, swap transaction
data related to both over-the-counter
and exchange traded swaps is required
to be reported to SDRs,45 and
consequently, swaps entered into by
CPOs and pools, whether on an
exchange or over-the-counter, are
reported to SDRs and included in the
data set that Commission staff can use
to conduct broader market surveillance.
The Commission has also maintained,
and in some instances enhanced, its
daily reporting regime for derivatives
clearing organizations (DCOs), clearing
41 Id.
at 11266.
CPO–PQR Proposed Rule, 76 FR at 7978
(‘‘The information that the Commission currently
receives is limited, not designed to measure
systemic or market risk in any meaningful way, and
is only submitted by registered CPOs on an annual
basis.’’).
43 Form CPO–PQR Final Rule, 77 FR at 11268.
44 See 17 CFR pts. 45; App. 1 to pt. 45, 49.
45 17 CFR pt. 45.
42 Form
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members, designated contract markets
(DCMs), futures commission merchants
(FCMs), swap dealers, and large traders.
Commission regulations require DCOs
to make extensive daily reports,
containing information on the positions
and activities of clearing members and
customers, including commodity pools,
to the Commission.46 Commission
regulations also require reporting by
clearing members and large traders
themselves.47 Through this data, the
Commission can analyze positions and
risks at the DCO, clearing member, or
customer level, including customer
positions at more than one clearing
member, and clearing member positions
at more than one DCO.
The Commission’s risk surveillance
program focuses on identifying,
quantifying, and monitoring the risks to
the financial system posed by DCOs,
clearing participants, and other market
participants—including CPOs and their
operated pools. To this end, on a daily
basis, Commission staff work to: (1)
Identify positions in cleared products
that pose significant financial risk; and
(2) confirm that these risks are being
appropriately managed. Staff undertakes
these tasks at the customer level, the
firm level, and the DCO level. That is,
staff identifies both the customers that
pose risks to clearing members and
clearing members that pose risks to
DCOs.
Importantly, most of the transaction
and position information the
Commission uses for its surveillance
activities is available on a more timely
and frequent basis than the data
received on the current iteration of
Form CPO–PQR. Furthermore,
Commission programs to conduct
surveillance of exchanges, FCMs, and
DCOs already include CPOs and do not
rely on the information contained in
Schedules B and C of Form CPO–PQR.
Taken together, these efforts have
enhanced the Commission’s ability to
broadly and actively surveil financial
markets, including with respect to the
activities of CPOs and the pools they
operate. In general, the Commission’s
alternate data streams provide a more
timely, standardized, and reliable view
into relevant market activity than that
provided under Form CPO–PQR, which
make them much easier to combine into
a holistic surveillance program.
Although none of the Commission’s
current data streams offers a substitute
for the more detailed, pool-specific type
of information set forth in Schedules B
and C of Form CPO–PQR, the
Commission preliminarily believes that,
46 17
47 17
CFR 39.19.
CFR pt. 18.
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taking into account the Commission’s
current priorities and resource
availabilities, a Revised Form CPO–PQR
that could be more easily integrated
with these existing and more developed
data streams would enable the
Commission, with some additional data
analysis, to oversee and assess the
impact of CPOs and their operated pools
in the commodity interest markets in an
effective manner. The inclusion of the
LEIs for the CPO and its operated pools,
as explained more fully below, would
be key to helping facilitate this
integration with respect to CPOs and
pools that engage in the swaps markets.
The Commission also preliminarily
believes that this improved data
integration would mitigate the need to
engage in a more extensive, and likely
more burdensome, effort to improve the
utility of the data fields requested in
current Schedules B and C.
The Commission notes that more than
half of the largest CPOs and pools are
captured within the statutory
definitions of private fund investment
advisers and private funds and as such
are required to report on Form PF.48
Other large asset managers that are
registered as CPOs and file Form CPO–
PQR are sponsors or advisers to
investment companies registered under
the Investment Company Act of 1940,49
which, by definition, are not private
funds.50 Many of those registered
investment companies are also
commodity pools that trade commodity
interests to a meaningful degree as part
of their investment strategies; as a
result, those investment companies’
principal investment advisers have
registered with the Commission as
CPOs.51 Registered investment
companies are subject to a
comprehensive scheme of periodic
financial reporting under the federal
securities laws, and most of that data is
publicly available on the SEC’s website
through its EDGAR filing system.52 In
addition, all CPOs file annual certified
48 Based on the data received for the reporting
period of September 30, 2017, for example, eight
out of the ten largest CPOs filed Form PF in lieu
of Form CPO–PQR.
49 15 U.S.C. 80a–1, et seq.
50 15 U.S.C. 80b–2(29).
51 17 CFR 4.5(c); 17 CFR 4.12(c).
52 For instance, registered management
investment companies—a category that includes
those investment companies that are also
commodity pools—file with the SEC annual reports
on Form N–CEN, quarterly reports of their portfolio
holdings on Form N–PORT, and information about
their liquidity on Form N–LIQUID. Management
investment companies that are regulated as money
market funds are subject to different reporting, as
are other registered investment companies that are
organized as unit investment trusts, business
development companies, and face-amount
certificate companies.
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financial statements for their
commodity pools with NFA pursuant to
the Commission’s regulations.53 NFA
reviews the information in commodity
pool annual certified financial
statements, uses it as an input for
determining the frequency and scope of
its examinations of CPOs in
combination with the data that it
collects on its NFA Form PQR, and
communicates frequently with
Commission staff regarding its
examination of CPOs, as informed by its
review of such financial statements and
data filings.
The Commission acknowledges that a
determination to no longer routinely
collect the pool-specific data in
Schedules B and C would result in this
information not being readily available
to FSOC upon request, which was part
of the Commission’s envisioned purpose
for Form CPO–PQR when it was first
promulgated. As well, the Commission
notes that many dually registered CPOs
currently include commodity pools that
are not private funds in data that they
report on Form PF, in lieu of a filing on
Form CPO–PQR for such pools,
pursuant to § 4.27(d), and that if the
amendments proposed herein are
adopted as final, these CPOs could
decide to stop including these pools in
their Form PF filing. The Commission
understands that this could result in
less information relevant to commodity
pools being available to FSOC from
Form PF. However, given that FSOC is
otherwise provided with comparable
data for the sizeable number of dually
registered CPOs via Form PF, the
Commission preliminarily believes
FSOC’s monitoring should not be
materially affected compared to its
current state.
B. Revised Form CPO–PQR
With the proposed elimination of the
majority of the data fields set forth in
Schedules B and C of current Form
CPO–PQR, the resulting Revised Form
CPO–PQR would consist of the
information currently reported in
Schedule A of Form CPO–PQR, with a
couple deletions discussed below; the
pool schedule of investments, currently
reported under question 6 of Schedule
B; and new questions to solicit LEIs for
each CPO and its operated pools. All
CPOs would be required to report all of
this information quarterly, regardless of
their AUM. As intimated above, the
Commission preliminarily believes that
this information, when integrated with
other data streams available to the
Commission, would provide an effective
and efficient way for the Commission to
53 17
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oversee and assess the impact of CPOs
and their operated pools in the
commodity interest markets.
Current Schedule A provides the
Commission basic identifying
information about the CPO and its
operated pools and the service providers
they used, including the custodians and
brokers used by the CPO with respect to
some or all of the operated pools’ assets
and the pools’ monthly rate of return.
The Commission preliminarily believes
that this basic, demographic information
is useful in providing context with
respect to the more granular information
it receives regarding the positions held
by commodity pools from other sources.
At the moment, the data currently
collected in Form CPO–PQR cannot be
easily aggregated with other market
information that the Commission
collects, and, as such, has not been
integrated into the Commission’s market
oversight function, which limits its
utility to the Commission. Specifically,
the lack of LEI information for CPOs and
their operated pools makes it
challenging to align it with the data
received from DCOs, DCMs, SDRs, and
FCMs to compile a view into the
operations of CPOs and pools and the
various roles such entities inhabit
within the commodity interest markets.
The Commission is therefore proposing
to amend Form CPO–PQR to include a
question seeking the CPO’s and the
operated pools’ LEIs, to the extent they
have them. The inclusion of existing
LEIs within this smaller data set on
Revised Form CPO–PQR should enable
the Commission to more efficiently and
accurately synthesize the various
Commission data streams on an entityby-entity basis. Furthermore, inclusion
of LEIs may permit better use of SDR
and other data to illuminate the risk
inherent in pools and pool families. The
Commission also anticipates that the
inclusion of LEIs would greatly facilitate
the aggregation of data from commodity
pools under different levels of common
control.
Although the Commission is
proposing to continue to receive the
majority of the information currently
collected in Schedule A of Form CPO–
PQR, it is also proposing to eliminate
the questions regarding the pool’s
auditors and marketers. The
Commission and NFA receive
information regarding the independent
certified public accountants that all
CPOs are required to engage to prepare
certified annual reports, including
audited financial statements, for their
operated commodity pools through
other means, which the Commission
preliminarily believes obviates the need
for obtaining this information through
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Revised Form CPO–PQR.54 With respect
to a pool’s marketers, staff generally
accesses this information through
sources other than Form CPO–PQR,
such as registration records for APs
associated with the offered pool’s CPO
or through the disclosure document for
the pool. For example, persons
soliciting for pool participation units are
typically either associated persons of
the CPO 55 or registered representatives
of a broker dealer.56 Such persons are
subject to regulation by either the
Commission and NFA, or the SEC and
the Financial Industry Regulatory
Authority (FINRA). As such, the
Commission preliminarily believes that
it readily has the means to learn who
such persons are with respect to the
offering of participation units in a
particular commodity pool without
requiring that information to be reported
on Form CPO–PQR.
At present, most CPOs are only
required to submit the information in
Schedule A of Form CPO–PQR on an
annual basis; only Large CPOs submit
this information quarterly. In order to
fully integrate the information reported
on Revised Form CPO–PQR into the
Commission’s ongoing oversight of the
derivatives markets and commodity
pool industry, the Commission
preliminarily believes that the reporting
of this basic information on a more
frequent quarterly basis would be
necessary. The Commission therefore
preliminarily believes that requiring
reporting of this basic information on a
more frequent quarterly basis would
play an important role in facilitating
Commission’s ability to monitor trends
in the commodity pool industry.
The pool schedule of investments,
currently in Schedule B, provides the
Commission a fairly detailed breakdown
of how the pool’s investments are
allocated by asset category (cash,
equities, alternative investments, fixed
income, derivatives, options, and
funds). Although under the current
iteration of Form CPO–PQR only MidSized and Large CPOs are required to
submit any information in Schedule B,
and Mid-Sized CPOs only submit it
annually, the Commission preliminarily
believes that obtaining a pool schedule
of investment from all CPOs with
respect to their operated pools on a
regular, quarterly basis would assist the
Commission in understanding the
composition of a pool’s portfolio with a
limited, if any, increase in their filing
burden, as the Commission notes that
NFA Form PQR currently requires all
54 17
CFR 1.16.
CFR 1.3, associated person; 17 CFR 3.12.
56 17 CFR 3.12(h)(ii).
55 17
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CPOs regardless of size to file a pool
schedule of investments each quarter.
C. NFA Form PQR
As proposed, Revised Form CPO–PQR
would generally align with NFA Form
PQR. NFA Form PQR was implemented
in 2010 to elicit data to implement
NFA’s risk-based examination program
for CPOs.57 The form requests basic
identifying information for CPOs and
their operated pools, and a schedule of
investments, and requires all CPOs to
report this information quarterly. As a
whole, current NFA Form PQR is
essentially identical to current Schedule
A of Form CPO–PQR combined with the
pool of investments question from
Schedule B. The Commission also
understands that NFA has plans to
include questions regarding LEIs in
NFA Form PQR. If Revised Form CPO–
PQR is adopted as proposed, and NFA’s
amendments to include LEIs are also
finalized, the forms will be
substantively identical. Under those
circumstances, the Commission would
permit a CPO to file NFA Form PQR in
lieu of Revised Form CPO–PQR, offering
CPOs additional filing efficiencies
without compromising the
Commission’s ability to obtain affected
data.
As a corollary, the Commission is also
proposing to revise § 4.27(d), which
currently permits dually regulated CPOs
required to file Form PF with respect to
one or more of their operated private
funds to file Form PF in lieu of filing
current Form CPO–PQR with respect to
any commodity pools that are not
private funds.58 The Commission
believes that this provision would be
redundant in light of the proposed
provision to accept NFA Form PQR and
would frustrate an intended purpose of
this proposed rulemaking, which is to
allow the Commission to enhance the
Commission’s use of its own internal
data streams to effectuate an efficient
and effective oversight program of CPOs
and their operated pools, given that
Revised Form CPO–PQR would no
longer be closely aligned in content or
filing frequency with Form PF. The
Commission is not, however, proposing
to change Form PF’s status as the
Commission’s form, nor is the
Commission proposing to change its
requirement that dually registered CPOs
57 NFA Form PQR assists NFA in assessing risks,
identifying trends, and assigning audit priorities in
its oversight of CPOs. See National Futures
Association: CPO Quarterly Reporting
Requirements—Proposed Adoption of Compliance
Rule 2–46, https://www.nfa.futures.org/news/PDF/
CFTC/CR2_46_CPO_Quarterly_Report_082009.pdf
(last visited Dec. 30, 2019).
58 17 CFR 4.27(d).
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and CTAs continue to file Form PF with
the SEC.
Many dually registered CPOs
currently include commodity pools that
are not private funds in data that they
report on Form PF, in lieu of a filing on
Form CPO–PQR for such pools, in
reliance on § 4.27(d). If § 4.27(d) is
revised to eliminate this option for
dually registered CPOs, the Commission
understands that some or even all
dually registered CPOs that currently
file Form PF in lieu of Schedules B and/
or C of current Form CPO–PQR for their
non-private fund pools could cease to
include such non-private fund pools in
their Form PF filings, resulting in a
reduced data set collected on Form PF
as compared to the status quo. The
Commission preliminarily believes,
however, that this loss of data to the
SEC and FSOC would not meaningfully
impact the efficacy and intent of Form
PF in furthering the oversight of the
private fund industry, given that it
would only result in the loss of data on
Form PF with respect to non-private
fund pools.59
IV. Request for Comments
The Commission requests comment
on all aspects of this proposal.
Additionally, the Commission would
appreciate consideration of the
following specific questions:
A. Scope of Proposed Revised Form
CPO–PQR
1. CPOs that are jointly regulated by
the Commission and the SEC are
required to file Form PF with respect to
private funds; many commodity pools
are private funds within the meaning of
Form PF. One of the Commission’s
initial rationales for adopting Form
CPO–PQR was to encourage more
congruent and consistent regulation of
similarly situated entities among
Federal financial regulatory agencies,
particularly with respect to dually
registered CPOs required to file Form
PF. If Revised Form CPO–PQR is
adopted as proposed, Form PF and
Form CPO–PQR would become less
aligned, meaning that dually registered
CPOs would have reporting obligations
that are noticeably different from those
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59 Form
CPO–PQR Final Rule, 77 FR at 11281
(‘‘[T]o mitigate reporting costs to regulated entities
that may be registered with both the Commission
and with the SEC, the regulations have been
modified to allow dually registered entities to file
on [F]orm PF (plus the first schedule A of [F]orm
CPO–PQR) for all of their commodity pools, even
those that are not ‘private funds.’ ’’). As noted
previously, such CPOs relying upon on the
Commission’s acceptance of Form PF in lieu of a
Form CPO–PQR filing are currently required to file
NFA Form PQR on a quarterly basis under NFA
Rule 2–46.
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CPOs only subject to the Commission’s
jurisdiction. Would such a relative lack
of regulatory congruence negatively
impact CPOs? Should the Commission
instead rescind Form CPO–PQR in its
entirety and require all CPOs to file all
or part of Form PF with NFA? Why or
why not?
2. Many dually registered CPOs
currently include commodity pools that
are not private funds in data that they
report on Form PF, in lieu of a filing on
Form CPO–PQR for such pools,
pursuant to § 4.27(d). If the amendments
proposed herein are adopted as final,
these CPOs could decide to stop
including these pools in their Form PF
filing. For CPOs in this category, if Form
CPO–PQR is amended as proposed,
would you cease reporting data for these
pools on Form PF? Why or why not?
3. CPOs that operate commodity pools
that are registered investment
companies must report financial
information about those pools to the
SEC, while also providing annual pool
financial statements to NFA. Is there
any additional reporting of investment
company financial information that the
Commission has failed to consider in
this proposal that addresses the
concerns underlying Form CPO–PQR?
4. Are there any specific questions
that the Commission has proposed to
rescind that it should consider
retaining? Why?
5. Are there ways the Commission
could further clarify and refine the
reporting instructions for completing
Revised CPO–PQR in order to provide
CPOs with greater certainty that they are
completing the form correctly? For
example, could the form’s references to
other regulations or its defined terms be
simplified or made clearer? Please
suggest specific revisions.
B. NFA Form PQR
5. The Commission proposes to
permit a timely filing with NFA of NFA
Form PQR in lieu of a filing of the
revised Proposed Form CPO–PQR.
Should the Commission consider any
other ways to further align with NFA
Form PQR? What would those ways be?
Please describe in detail.
6. The schedule of investments as it
currently appears in both Revised Form
CPO–PQR and NFA Form PQR requires
significant granular information
regarding numerous asset classes. Are
there any asset classes that can or
should be eliminated? Why or why not?
Should the Commission consider
amending the schedule of investments
to align with the simpler schedule that
appeared in NFA Form PQR in 2010?
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C. Addition of LEIs
7. In order to further the analysis of
Revised Form CPO–PQR across other
existing Commission data sets, the
Commission is proposing to require the
inclusion of LEIs in Revised Form CPO–
PQR, to the extent that the CPO or its
operated pools otherwise already have
LEIs. The inclusion of LEIs would also
make this portion of Form CPO–PQR
data more accessible for analysis
consistent with these other data sets.
Should the Commission include LEIs on
Revised Form CPO–PQR? Why or why
not?
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
requires Federal agencies, in
promulgating regulations, to consider
whether the rules they propose will
have a significant economic impact on
a substantial number of small entities
and, if so, to provide a regulatory
flexibility analysis regarding the
economic impact on those entities. Each
Federal agency is required to conduct an
initial and final regulatory flexibility
analysis for each rule of general
applicability for which the agency
issues a general notice of proposed
rulemaking.60
These regulatory amendments
proposed by the Commission would
affect only persons registered or
required to be registered as CPOs. The
Commission has previously established
certain definitions of ‘‘small entities’’ to
be used by the Commission in
evaluating the impact of its rules on
such entities in accordance with the
requirements of the RFA.61 With respect
to CPOs, the Commission previously has
determined that a CPO is a small entity
for purposes of the RFA, if it meets the
criteria for an exemption from
registration under § 4.13(a)(2).62
Because the regulations proposed in this
document generally apply to persons
registered or required to be registered as
CPOs with the Commission, as well as
from related compliance burdens, the
RFA is not applicable to this Proposal.
Accordingly, the Chairman, on behalf
of the Commission, hereby certifies
60 5
U.S.C. 601 et seq.
e.g., Policy Statement and Establishment of
Definitions of ‘‘Small Entities’’ for Purposes of the
Regulatory Flexibility Act, 47 FR 18618, 18620
(Apr. 30, 1982).
62 Id. at 18619–20. Section 4.13(a)(2) exempts a
person from registration as a CPO when: 1) none of
the pools operated by that person has more than 15
participants at any time, and 2) when excluding
certain sources of funding, the total gross capital
contributions the person receives for units of
participation in all of the pools it operates or
intends to operate do not, in the aggregate, exceed
$400,000. See 17 CFR 4.13(a)(2).
61 See,
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pursuant to 5 U.S.C. 605(b) that these
proposed amendments, if adopted, will
not have a significant economic impact
on a substantial number of small
entities.
B. Paperwork Reduction Act
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1. Overview
The Paperwork Reduction Act (PRA)
imposes certain requirements on
Federal agencies in connection with
their conducting or sponsoring any
collection of information as defined by
the PRA.63 Under the PRA, an agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid control
number from the Office of Management
and Budget (OMB). This Proposal, if
adopted, would result in a collection of
information within the meaning of the
PRA, as discussed below. The
Commission is therefore submitting this
NPRM to OMB for review.
The Proposal amends a single
collection of information for which the
Commission has previously received a
control number from OMB. This
collection of information is, ‘‘Rules
Relating to the Operations and
Activities of Commodity Pool Operators
and Commodity Trading Advisors and
to Monthly Reporting by Futures
Commission Merchants, OMB control
number 3038–0005’’ (Collection 3038–
0005). Collection 3038–0005 primarily
accounts for the burden associated with
part 4 of the Commission’s regulations
that concern compliance obligations
generally applicable to CPOs and CTAs,
as well as certain enumerated
exemptions from registration as such
and exclusions from those definitions,
and available relief from compliance
with certain regulatory requirements.
As discussed above, the Commission’s
Proposal includes substantive changes
to current Form CPO–PQR, such as (1)
amending Schedule A, which would
constitute the entirety of Proposed Form
CPO–PQR, to add LEIs for each CPO and
pool, (2) moving Schedule B’s
‘‘Schedule of Investments’’ section to
Schedule A, and (3) rescinding the
remainder of the Form’s current
Schedules B and C.64 Additionally, the
Commission is proposing to permit the
filing of NFA Form PQR with NFA in
lieu of filing Form CPO–PQR by CPOs
registered with the Commission.
Therefore, the Commission is also
proposing herein to amend Collection
3038–0005, such that the collection is
consistent with the proposed
63 See
64 See
44 U.S.C. 3501 et seq.
supra pt. III.A.
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restructuring of Form CPO–PQR, and
reflects the expected adjustment in
burden hours for registered CPOs filing
the form, if revised as proposed,
including the ability to file NFA Form
PQR in lieu of filing Revised Form
CPO–PQR.
This Proposal is not expected to
impose any significant new burdens on
CPOs. Rather, because approximately
half of registered CPOs are Mid-Sized or
Large CPOs under the current filing
regime and will have to answer fewer
questions as compared to the current
filing requirements, and because the
Commission anticipates that CPOs
currently classified as Small CPOs will
file their NFA Form PQR in lieu of the
Revised Form CPO–PQR, it is
reasonable for the Commission to infer
that the proposed amendments will
generally prove to be either less
burdensome or without new net burden
for all CPOs. The Commission is,
however, amending the burden
associated with the collection to reflect
the increased frequency of filing for all
CPOs to quarterly and increasing the
hours per filing to reflect the addition of
the pool schedule of investments to the
questions in Revised Form CPO–PQR
that were derived from current Schedule
A. Although these proposed
amendments result in an increase in the
burden hours associated with Revised
Form CPO–PQR, the Commission
preliminarily expects that, in practice,
CPOs will either experience no change
in their burden or a decrease in burden.
As discussed above, the Commission
is proposing herein to accept the filing
of NFA Form PQR in lieu of a filing on
Revised Form CPO–PQR. Because under
the proposal any data filed on NFA
Form PQR would become data collected
by the Commission, the burden
associated with NFA Form PQR must be
included in a collection of information
with an OMB control number.
Therefore, the Commission is amending
the current burden associated with OMB
Control Number 3038–0005 to also
reflect the burden resulting from NFA
Form PQR, which the Commission
estimates to be substantively identical to
that derived from Revised Form CPO–
PQR.
Despite the fact that the Commission
is proposing to accept the filing of NFA
Form PQR in lieu of a filing on Revised
Form CPO–PQR, the Commission
preliminarily believes that it is
necessary to retain its own form for data
collection purposes to ensure that it
retains the authority to address its data
needs regarding CPOs in the future on
a unilateral basis should the need arise.
Moreover, given the Commission’s
preliminary expectation that it would
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incorporate the information collected on
Revised Form CPO–PQR more
consistently with its other data streams,
the Commission preliminarily believes
that retaining its own form independent
of NFA’s form avoids any appearance of
the Commission leveraging NFA to
avoid complying with the obligations
associated with rulemaking. The
Commission also preliminarily believes
that doing so will ensure that members
of the public will be able to exercise
their rights to engage in comment as to
the content and structure of the form
consistent with the Administrative
Procedures Act going forward.65
Therefore, the Commission has
preliminarily concluded that the
amendments to Form CPO–PQR
proposed herein are not unnecessarily
duplicative to information otherwise
reasonably accessible to the
Commission.
2. Revisions to the Collections of
Information: OMB Control Number
3038–0005
Collection 3038–0005 is currently in
force with its control number having
been provided by OMB, and it was
renewed recently on January 30, 2019.66
As stated above, Collection 3038–0005
governs responses made pursuant to
part 4 of the Commission’s regulations,
pertaining to the operations of CPOs and
CTAs, including the required responses
of registered CPOs on Form CPO–PQR
pursuant to § 4.27. Generally, the
Commission is proposing adjustments,
discussed below, to the information
collection that result in an increase in
the burden hours associated with the
collection of information on the Revised
Form CPO–PQR. The Commission
preliminarily believes, however, as
previously stated, that CPOs currently
categorized as either Mid-Sized or Large
CPOs are expected to experience a
reduction in burden relative to the
current filing requirements under § 4.27
and Form CPO–PQR, and Small CPOs
under the current filing requirements
are expected to experience no increase
in burden because they are currently
required to file NFA Form PQR, which
includes a schedule of investments that
is identical to that under Revised Form
CPO–PQR, on a quarterly basis, and,
under this proposal, such CPOs would
be permitted to file NFA Form PQR in
lieu of filing Revised CPO–PQR.
65 5
U.S.C. 500 et. seq.
Notice of Office of Management and Budget
Action, OMB Control No. 3038–0005, available at
https://www.reginfo.gov/public/do/PRAView
ICR?ref_nbr=201701-3038-005 (last retrieved July
31, 2018).
66 See
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The currently approved total burden
associated with Collection 3038–0005,
in the aggregate, is as follows:
Estimated number of respondents:
45,097.
Annual responses for all respondents:
118,824.
Estimated average hours per response:
3.16.67
Annual reporting burden: 375,484.
The portion of the aggregate burden
that is derived from the current Form
CPO–PQR filing requirements is as
follows.
Schedule A (for non-Large CPOs and
Large CPOs filing Form PF):
Estimated number of respondents:
1,450.
Annual responses for all respondents:
1,450.
Estimated average hours per response:
6.
Annual reporting burden: 8,700.
Schedule A (for Large CPOs not filing
Form PF):
Estimated number of respondents:
250.
Annual responses for all respondents:
1,000.
Estimated average hours per response:
6.
Annual reporting burden: 6,000.
Schedule B (for Mid-Sized CPOs):
Estimated number of respondents:
400.
Annual responses for all respondents:
400.
Estimated average hours per response:
4.
Annual reporting burden: 1,600.
Schedule B (for Large CPOs not filing
Form PF):
Estimated number of respondents:
250.
Annual responses for all respondents:
1,000.
Estimated average hours per response:
4.
Annual reporting burden: 4,000.
Schedule C (for Large CPOs not filing
Form PF):
Estimated number of respondents:
250.
Annual responses for all respondents:
1,000.
Estimated average hours per response:
18.
Annual reporting burden: 18,000.
The burden associated with NFA
Form PQR is as follows:
Estimated number of respondents:
1,700.
Annual responses by each
respondent: 6,800.
67 The Commission rounded the average hours
per response to the second decimal place for ease
of presentation.
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Estimated average hours per response:
8.
Annual reporting burden: 54,400.
Total annual reporting burden for all
CPOs for current Form CPO–PQR and
NFA Form PQR: 86, 900.
The Commission is proposing to no
longer estimate burden hours according
to each individual Schedule of Form
CPO–PQR, because, pursuant to the
Proposal, Revised Form CPO–PQR will
only consist of one schedule. Therefore,
the Commission is proposing to simplify
the collection for Form CPO–PQR
compliance to a single burden hours
estimate for each registered CPO
completing Revised Form CPO–PQR in
its entirety.68 As noted above, the
Commission is also proposing to require
that Revised Form CPO–PQR be filed
quarterly by each registered CPO,
regardless of the size of their operations,
which would result in four (4) annual
responses by each respondent. Further,
in the Commission’s experience, the
schedule of investments comprised a
considerable portion of the burden
hours previously associated with
completing Schedule B, depending on
the complexity of a CPO’s operations
and the number of pools it operates.
Thus, the Commission is proposing an
estimated average hours per response to
ensure that burden continues to be
counted. As noted above, although the
estimated hours per response is
expected to increase due to the retention
of the schedule of investments and the
frequency of response will increase as
well for Small and Mid-Sized CPOs, as
well as those Large CPOs filing Form
PF, CPOs should not experience an
increase in burden because all CPOs are
already required to provide an identical
schedule of investments as part of their
existing NFA Form PQR filing
requirement, which must be submitted
on a quarterly basis, and the
Commission preliminarily believes that
CPOs will continue to make such filing
in lieu of the Revised Form CPO–PQR.
Therefore, the Commission estimates
the burden to registered CPOs for
completing Revised Form CPO–PQR, as
proposed herein, and NFA Form PQR,
because of the option to file this form
in lieu of Revised Form CPO–PQR, to be
as follows:
For Revised Form CPO–PQR and NFA
Form PQR for All Registered CPOs:
68 The Commission is also proposing to accept
NFA Form PQR in lieu of Revised Form CPO–PQR
filing requirement, which the Commission has
designed purposefully to be very similar. See supra
pt. III.B. The PRA estimates proposed herein
assume that all registered CPOs will either file
Revised Form CPO–PQR on a quarterly basis, or
NFA Form PQR, but in no event will a CPO be
required to file both.
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Estimated number of respondents:
1,700.
Annual responses by each
respondent: 6,800.
Estimated average hours per response:
8.
Annual reporting burden: 54,400.
The new total burden associated with
Collection 3038–0005, in the aggregate,
reflecting the adjustment in burden
associated with § 4.27 and Revised Form
CPO–PQR, is as follows:
Estimated number of respondents:
43,062.
Annual responses for all respondents:
113,980.
Estimated average hours per response:
3.25.
Annual reporting burden: 370,467.
3. Request for Comments on Collection
The Commission invites the public
and other Federal agencies to comment
on any aspect of the proposed
information collection requirements
discussed above. Pursuant to 44 U.S.C.
3506(c)(2)(B), the Commission solicits
comments in order to (i) evaluate
whether the proposed collections of
information are necessary for the proper
performance of the functions of the
Commission, including whether the
information will have practical utility;
(ii) evaluate the accuracy of the
Commission’s estimate of the burden of
the proposed collections of information;
(iii) determine whether there are ways
to enhance the quality, utility, and
clarity of the information proposed to be
collected; and (iv) minimize the burden
of the proposed collections of
information on those who are to
respond, including through the use of
appropriate automated collection
techniques or other forms of information
technology.
Those desiring to submit comments
on the proposed information collection
requirements should submit them
directly to the Office of Information and
Regulatory Affairs, OMB, by fax at (202)
395–6566, or by email at
OIRAsubmissions@omb.eop.gov. Please
provide the Commission with a copy of
submitted documents, so that all
comments can be summarized and
addressed in the final rule preamble.
Refer to the ADDRESSES section of this
NPRM for comment submission
instructions to the Commission. A copy
of the supporting statements for the
collections of information discussed
above may be obtained by visiting
https://www.RegInfo.gov. OMB is
required to make a decision concerning
the collections of information between
30 and 60 days after publication of this
document in the Federal Register.
Therefore, a comment is best assured of
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having its full effect if OMB receives it
within 30 days of publication.
C. Cost-Benefit Considerations
Section 15(a) of the CEA requires the
Commission to consider the costs and
benefits of its discretionary actions
before promulgating a regulation under
the CEA or issuing certain orders.69
Section 15(a) further specifies that the
costs and benefits shall be evaluated in
light of five broad areas of market and
public concern: (1) Protection of market
participants and the public; (2)
efficiency, competitiveness, and
financial integrity of swaps markets; (3)
price discovery; (4) sound risk
management practices; and (5) other
public interest considerations. The
Commission considers the costs and
benefits resulting from its discretionary
determinations with respect to the CEA
section 15(a) considerations.
As discussed above, the Commission
is proposing amendments to Form CPO–
PQR that would significantly reduce the
amount of reporting required
thereunder. Specifically, the proposal
would: (1) Eliminate the pool-specific
reporting requirements in existing
Schedules B and C of Form CPO–PQR,
other than the pool schedule of
investments (question 6 of Schedule B);
(2) amend the information in existing
Schedule A of the form to request LEIs
for CPOs and their operated pools and
to eliminate questions regarding the
pool’s auditors and marketers; (3)
require all CPOs to submit all
information retained in Revised Form
CPO–PQR on a quarterly basis; and (4)
allow CPOs to file NFA Form PQR in
lieu of filing the Revised Form CPO–
PQR, to the extent NFA Form PQR is
amended to include LEIs. In the sections
that follow, the Commission considers
the various costs and benefits associated
with each of aspect of the proposal. The
baseline against which these costs and
benefits are compared is the regulatory
status quo, represented by Form CPO–
PQR as currently codified in appendix
A to part 4.
The consideration of costs and
benefits below is based on the
understanding that the markets function
internationally, with many transactions
involving U.S. firms taking place across
international boundaries; with some
Commission registrants being organized
outside of the United States; with some
leading industry members typically
conducting operations both within and
outside the United States; and with
industry members commonly following
substantially similar business practices
wherever located. Where the
69 7
U.S.C. 19(a).
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Commission does not specifically refer
to matters of location, the discussion of
costs and benefits below refers to the
effects of this proposal on all activity
subject to the proposed and amended
regulations, whether by virtue of the
activity’s physical location in the
United States or by virtue of the
activity’s connection with or effect on
U.S. commerce under CEA section
2(i).70 Some CPOs are located outside of
the United States.
1. Elimination of Pool-Specific
Reporting Requirements in Schedules B
and C
The Commission is proposing to
eliminate the pool-specific reporting
requirements in existing Schedules B
and C of Form CPO–PQR, other than the
pool schedule of investments (question
6 of Schedule B). The Commission
acknowledges that this change, if
adopted, could result in less
information available to the
Commission and, potentially, to FSOC.
The detailed and specific information
requested in Schedules B and C of Form
CPO–PQR is not available to the
Commission through any other of its
data streams and, if put to its full use,
would allow for monitoring of CPOs and
their operated pools in a way that could
help identify trends and points of stress.
A main reason for the Commission’s
proposal to eliminate collection of this
information stems from the challenges
associated with the data set, including
that it is only reported to the
Commission on a quarterly basis, at its
most frequent. Given the limitations
associated with the data collected, the
Commission has prioritized its limited
resources to pursue other key regulatory
initiatives.
However, considering the alternate
data streams currently available to the
Commission, the Commission
preliminarily believes that the
Commission could nevertheless
effectively exercise its oversight of CPOs
and their operated pools and potentially
do so in a more efficient manner if
Revised Form CPO–PQR were adopted
as proposed. Furthermore, the
Commission notes that, due in part to
the identified data quality issues, FSOC
has never received any Form CPO–PQR
data; however, the Commission
acknowledges that FSOC may receive
less data as a result of the proposal, as
some CPOs that are filing CFTC-only
pool information through Form PF may
stop doing so should this proposal be
adopted as final. The Commission does
not, however, believe that FSOC’s
monitoring abilities would be materially
70 7
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affected compared to the current status
quo should Schedules B and C largely
be eliminated.
The Commission’s proposal to
eliminate these reporting requirements
would also reduce the ongoing variable
compliance costs for Mid-Sized and
Large CPOs, as they would no longer
need to devote resources to compiling
and reporting this data. Nor would
CPOs be required to monitor their AUM
with the specific purpose of
determining their filing obligations as
there would be a single requirement for
all CPOs. It is possible that such cost
savings may allow those CPOs to devote
resources to other compliance or
operational initiatives, or to potentially
pass them on to pool participants
through reduced fees. These cost
savings would be minimized, however,
for any CPO that is dually registered
with the SEC and required to file Form
PF, which requires reporting of
information substantially similar to that
required in Schedules B and C of
current Form CPO–PQR. Additionally,
the proposal would not alleviate any
fixed costs affected CPOs may have
already spent in developing systems and
procedures designed to meet the
reporting requirements in Schedules B
and C, particularly if, again, such CPOs
are also required to file Form PF.
2. Revised Form CPO–PQR
The proposal would amend the
information in existing Schedule A of
the form to request LEIs for CPOs and
their operated pools. The addition of
this question would allow the
Commission to be able to integrate the
data provided in Revised Form CPO–
PQR with the Commission’s other more
current data streams. Leveraging these
other data sources would enable the
Commission to continue its oversight
and monitoring of counterparty risk and
liquidity risk for some of the largest
pools within the Commission’s
jurisdiction, thereby focusing on areas
that are relevant for assessing market
and systemic risk, while eliminating the
burden associated with the collection of
the more detailed information in current
Schedules B and C, particularly with
respect to pools that may meet the
current Large Pool threshold in the
future. The addition of this field should
create a one-time cost for CPOs required
to file Revised Form CPO–PQR, as LEIs
do not change over time, potentially
allowing fields for those questions to be
prepopulated for subsequent filings.
The proposal would further eliminate
questions regarding the pool’s auditors
and marketers. This amendment will
result in reduced reporting costs for
reporting CPOs while not affecting the
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scope of information available to the
Commission, as the Commission already
receives information regarding CPO’s
accountants and has alternate means of
obtaining information about a pool’s
marketers. For example, persons
soliciting for pool participation units are
typically either associated persons of
the CPO or registered representatives of
a broker dealer. Such persons are
subject to regulation by either the
Commission and NFA, or the SEC and
FINRA.
Currently, all CPOs other than Large
CPOs submit the information in
Schedule A on an annual basis.
Increasing the frequency of reporting of
this information will assist the
Commission in its efforts to integrate
Revised Form CPO–PQR with the
Commission’s other more timely data
sources, so as to improve the
effectiveness of its ability to monitor
and oversee the activities of CPOs and
their operated pools. Although this
would result in an increased regulatory
cost for Small and Mid-Sized CPOs
compared to the regulatory status quo,
the costs as actually realized by these
CPOs may not be as significant, as they
are already reporting this information
on a quarterly basis to NFA via NFA
Form PQR.
Under current Form CPO–PQR, only
Mid-Sized and Large CPOs are required
to submit a pool schedule of
investments, and Mid-Sized CPOs only
submit that information annually. The
proposal would require all CPOs to
submit that information quarterly. The
Commission believes that receiving this
information from all CPOs and more
frequently would, when combined with
the proposed LEI requirements, further
enhance its ability to integrate the
information in Revised CPO–PQR with
its other more current data streams and
identify trends on a more timely basis,
with the ultimate goal of supporting its
oversight and monitoring of CPOs and
their operated pools for market and
systemic risk. As with the change in
reporting frequency for the information
in Schedule A, this change would result
in an increased regulatory cost
compared to the regulatory status quo
for Small and Mid-Sized CPOs, as Small
CPOs would be required to develop the
procedures and systems necessary to
take on the additional reporting
obligations for the pool schedule of
investments and both Small and MidSized CPOs would now report that
information on a quarterly basis.
However, all CPOs are already required
to report this information on a quarterly
basis to NFA via NFA Form PQR,
meaning the actual costs as realized by
these CPOs may not be as significant.
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The proposal would allow CPOs to
file NFA Form PQR in lieu of filing the
Revised Form CPO–PQR, to the extent
NFA Form PQR is amended to include
LEIs, as the Commission understands
NFA has planned. Under NFA’s rules,
all CPOs regardless of size are currently
required to file NFA Form PQR on a
quarterly basis. This provision would
therefore operate to help CPOs maintain
their current filing costs without
affecting the scope of information
available to the Commission under
Revised Form CPO–PQR.
As mentioned above, the Commission
acknowledges that, through the
proposed revision of § 4.27(d), the
proposal could result in less data being
collected on Form PF as compared to
the current status quo. Many dually
registered CPOs currently include
commodity pools that are not private
funds in data that they report on Form
PF, in lieu of a filing on Form CPO–PQR
for such pools, in reliance on § 4.27(d).
If § 4.27(d) is revised, these CPOs could
decide to stop including these pools in
their Form PF filing. The Commission
preliminarily believes, however, that
this loss of data to the SEC and FSOC
would not meaningfully impact the
efficacy and intent of Form PF in
furthering the oversight of the private
fund industry, given that it would only
result in the loss of data with respect to
non-private fund pools; however, the
Commission acknowledges that FSOC
may lose data for a specific type of
private fund asset class, managed
futures.
3. Alternatives
In lieu of amending Form CPO–PQR
as proposed, the Commission could
require all CPOs, regardless of whether
they are dually registered, to file Form
PF. The Commission preliminarily
believes that this alternative could
operate to increase the reporting
burdens for CPOs that are not dually
registered with the SEC without feeding
information directly to the Commission
that could be integrated with its other
data sources to develop its internal
oversight initiatives over CPOs and their
operated pools.
Alternatively, the Commission could
devote resources to rectifying the
challenges with the data reported under
current Form CPO–PQR, and amend the
Form to require greater consistency and
frequency of reporting of the data fields
proposed to be eliminated in this
proposal. However, the Commission
preliminarily believes that its limited
resources could be better directed in
line with its regulatory priorities, and
that its objectives with respect to
oversight of CPOs and their operated
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pools could be effectively and
potentially, more efficiently, achieved
through integration with existing data
streams.
The Commission preliminarily
believes that the proposed changes to
Form CPO–PQR, relative to the
alternatives, would permit the
Commission to discharge its regulatory
duties with respect to CPOs and their
operated pools that might have the
greatest impact on market and systemic
risk while easing reporting obligations
on a significant number of CPOs. The
Commission requests comments and
data on how potential alternatives
would impact the potential costs and
benefits to market participants and the
public. Are there any other alternatives
that may provide preferable costs or
benefits than the costs and benefits
related to the Proposal?
4. Section 15(a) Factors
a. Protection of Market Participants and
the Public
The Commission preliminarily
believes that the proposal would
enhance the ability of the Commission
to protect derivatives markets, its
participants, and the public by allowing
it to integrate the data provided in
Revised Form CPO–PQR with other
existing, more up-to-date, data streams
in a way that would allow the
Commission to better exercise its
oversight of CPOs and their operated
pools. The Commission notes that the
amendments proposed herein could
result in a loss of data available to
FSOC, which could limit FSOC’s
visibility into the activities of CPOs and
their operated pools.
b. Efficiency, Competitiveness, and
Financial Integrity of Markets
The Commission preliminarily
believes that the proposal would assist
the Commission in its efforts to support
market efficiency, competitiveness, and
financial integrity. Under the proposal,
CPOs would continue to provide useful
information about themselves and their
pools to the Commission in a way that
it could incorporate with other data
streams to improve its oversight of
CPOs, their pools, and how they operate
within and affect the derivatives
markets. Additionally, the Commission
preliminarily believes that the specific
requirement that a CPO prepare a pool
schedule of investments on a quarterly
basis for each of its operated pools
could result in heightened diligence by
the CPO with respect to the pools’
ongoing operations and encourage
particularly smaller CPOs to adopt more
formalized controls for their businesses,
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which the Commission preliminarily
believes would enhance the confidence
of other market participants in
transacting with CPOs and their
operated pools.
qualitative savings. Please provide all
quantitative and qualitative costs,
including, but not limited to personnel
costs and technological costs.
c. Price Discovery
The Commission has not identified
any impact that the Proposal would
have on price discovery.
Section 15(b) of the CEA requires the
Commission to take into consideration
the public interest to be protected by the
antitrust laws and endeavor to take the
least anticompetitive means of
achieving the purposes of the CEA, in
issuing any order or adopting any
Commission rule or regulation
(including any exemption under CEA
section 4(c) or 4c(b)), or in requiring or
approving any bylaw, rule, or regulation
of a contract market or registered futures
association established pursuant to
section 17 of this Act.71
The Commission preliminarily
believes that the public interest to be
protected by the antitrust laws is
generally to protect competition. The
Commission requests comment on
whether the Proposal implicates any
other specific public interest to be
protected by the antitrust laws.
The Commission has considered the
Proposal to determine whether it is
anticompetitive and has preliminarily
identified no anticompetitive effects.
The Commission requests comment on
whether the Proposal is anticompetitive
and, if it is, what the anticompetitive
effects are.
Because the Commission has
preliminarily determined that the
Proposal is not anticompetitive and has
no anticompetitive effects, the
Commission has not identified any less
anticompetitive means of achieving the
purposes of the Act. The Commission
requests comment on whether there are
less anticompetitive means of achieving
the relevant purposes of the Act that
would otherwise be served by adopting
the Proposal.
d. Sound Risk Management Practices
Although the Commission is
proposing that it no longer require CPOs
and their operated pools to report
certain risk information, the
Commission recognizes that CPOs will
likely continue to benefit from
possessing systems that collect and
review risk-related information. The
Commission has not identified any
other impact that the Proposal would
have on sound risk management
practices.
e. Other Public Interest Considerations
The Commission has not identified
any impact on any other public interest
considerations that the Proposal would
have, but seeks public comment on any
public interest the Commission should
consider in this rulemaking.
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5. Request for Comments
The Commission invites public
comment on its cost-benefit
considerations, including the Section
15(a) factors described above.
Commenters are invited to submit with
their comment letters any data or other
information that they may have that
quantifies the costs and benefits of the
Proposal. In addition, the Commission
invites the public comment on the
following questions.
1. Has the Commission misidentified
any costs or benefits? If so, please
explain.
2. Please explain whether CPO
compliance costs would increase or
decrease as a result of reduced reporting
requirements in this Proposal? Please
provide all quantitative and qualitative
costs, including, but not limited to
personnel costs and technological costs.
3. Would harmonization of Form
CPO–PQR with other similar forms,
such as Form PF, provide a greater
savings in compliance costs? If so,
please describe all quantitative and
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D. Antitrust Laws
List of Subjects in 17 CFR Part 4
Advertising, Brokers, Commodity
futures, Commodity pool operators,
Commodity trading advisors, Consumer
protection, Reporting and recordkeeping
requirements.
For the reasons stated in the
preamble, the Commodity Futures
71 7
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Trading Commission proposes to amend
17 CFR part 4 as set forth below:
PART 4—COMMODITY POOL
OPERATORS AND COMMODITY
TRADING ADVISORS
1. The authority citation for part 4
continues to read as follows:
■
Authority: 7 U.S.C. 1a, 2, 6(c), 6b, 6c, 6l,
6m, 6n, 6o, 12a, and 23.
2. Amend § 4.27 by revising
paragraphs (c)(1) and (d) to read as
follows:
■
§ 4.27 Additional reporting by commodity
pool operators and commodity trading
advisors.
*
*
*
*
*
(c) * * *
(1) Each reporting person shall file
with the National Futures Association, a
report with respect to the directed assets
of each pool under the advisement of
the commodity pool operator consistent
with appendix A to this part or
commodity trading advisor consistent
with appendix C to this part; Provided
that, a commodity pool operator
required to file NFA Form PQR with the
National Futures Association for the
reporting period may make such filing
in lieu of the report required under this
section consistent with appendix A to
this part.
*
*
*
*
*
(d) Investment advisers to private
funds. CPOs and CTAs that are dually
registered with the Securities and
Exchange Commission, and that are
required to file Form PF under the rules
promulgated under the Investment
Advisers Act of 1940, shall file Form PF
with the Securities and Exchange
Commission. Dually registered CPOs
and CTAs that file Form PF with the
Securities and Exchange Commission
will be deemed to have filed Form PF
with the Commission for purposes of
any enforcement action regarding any
false or misleading statement of a
material fact in Form PF.
*
*
*
*
*
■ 3. Revise appendix A to part 4 to read
as follows:
Appendix A to Part 4—Form CPO–PQR
BILLING CODE 6351–01–P
U.S.C. 19(b).
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26410
Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Proposed Rules
Issued in Washington, DC, on April 16,
2020, by the Commission.
Robert Sidman,
Deputy Secretary of the Commission.
Note: The following appendices will
not appear in the Code of Federal
Regulations.
Appendices to Amendments to
Compliance Requirements for
Commodity Pool Operators on Form
CPO–PQR—Commission Voting
Summary and Commissioners’
Statements
Appendix 1—Commission Voting
Summary
On this matter, Chairman Tarbert and
Commissioners Quintenz, Behnam, Stump,
and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
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Appendix 2—Supporting Statement of
Chairman Heath P. Tarbert
The esteemed 19th century mathematician
Charles Babbage asked ‘‘if you put into the
machine the wrong figures, will the right
answers come out?’’ 1 Baggage foresaw what
would evolve in the 20th century as the
‘‘garbage-in, garbage-out’’ predicament—a
potential pitfall now only magnified in the
21st century by the combination of
computing technology and vast amounts of
data. Since becoming Chairman, I have
prioritized improving the CFTC’s approach to
collecting data. As a federal agency, we must
be selective about the data we collect, and
then make sure we are actually making good
use of the data for its intended purpose.
This issue has arisen in a number of
contexts here at the CFTC. For example, we
recently proposed amendments to our swap
data reporting rules, which cover both
regulatory reporting and the disclosure of
certain swap transaction data to the public at
large.2 The purpose of those amendments is
1 Charles Baggage, Passages from the Life of a
Philosopher (London 1864).
2 See Proposed Rule: Amendments to the RealTime Public Reporting Requirements (Part 43) (Feb.
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to simplify the swap data reporting process
to ensure that market participants are not
burdened with unclear or duplicative
reporting obligations that do little to reduce
market risk or facilitate price discovery. If
those amendments are adopted, the CFTC
will no longer collect data that does not
advance our oversight of the swaps markets.3
And we will start collecting additional data
that does.
Today we are engaged in a similar exercise.
We are considering amendments to the
compliance requirements for commodity
pool operators (‘‘CPOs’’) on Form CPO–PQR.
These amendments reflect the CFTC’s
reassessment of the scope of Form CPO–PQR
and how it aligns with our current regulatory
priorities. By refining our approach to data
collection, today’s amendments—in
conjunction with our current market
surveillance efforts—would enhance the
CFTC’s ability to gain more timely insight
into the activities of CPOs and their operated
pools. At the same time, the amendments
would reduce reporting burdens for market
participants.
Background on Form CPO–PQR
Form CPO–PQR requests information
regarding the operations of a CPO, and each
pool that it operates, in varying degrees of
frequency and complexity, depending upon
the assets under management (‘‘AUM’’) of
both the CPO and the operated pool(s). When
adopting Form CPO–PQR in 2012, the
Commission determined that form data
would be used for several broad purposes,
including:
• Increasing the CFTC’s understanding of
our registrant population;
• assessing the market risk associated with
pooled investment vehicles under our
jurisdiction; and
20, 2020) (publication in the Federal Register
forthcoming); and Proposed Rule: Amendments to
the Swap Data Recordkeeping and Reporting
Requirements (Part 45) (Feb. 20, 2020) (publication
in the Federal Register forthcoming).
3 See Heath P. Tarbert, Chairman, CFTC,
Statement in Support of Proposed Rules on Swap
Data Reporting (Feb. 20, 2020), available https://
www.cftc.gov/PressRoom/SpeechesTestimony/
tabertstatement022020.
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• monitoring for systemic risk.4
For the majority of more pool-specific
questions on Form CPO–PQR, the
Commission believed the incoming data
would assist the CFTC in monitoring
commodity pools to identify trends over
time. For example, the CFTC would get
information regarding a pool’s exposure to
asset classes, the composition and liquidity
of a pool’s portfolio, and a pool’s
susceptibility to failure in times of stress.5
Shortcomings of Form CPO–PQR
Seven years of experience with Form CPO–
PQR, however, have not born out that vision.
To begin with, in an effort to take into
account the different ways CPOs maintain
information, the Commission has allowed
CPOs flexibility in how they calculate and
present certain of the data elements. As a
result, it has been challenging, to say the
least, for the CFTC to identify trends across
CPOs or pools using Form CPO–PQR data. In
addition, taking into account the volume and
complexity of the data it was requesting, the
Commission decided not to require the data
to be provided in real-time, but instead
mandated only post hoc quarterly or annual
filings.
As the CFTC staff has reviewed the data
over the years, it has become apparent that
the disparate, infrequent, and delayed nature
of CPO reporting has made it difficult to
assess the impact of CPOs and their operated
pools on markets. This is largely because
conditions and relative CPO risk profiles may
have changed, potentially significantly, by
the time Form CPO–PQR is filed with the
CFTC. This was not entirely unforeseen.
When Form CPO–PQR was adopted, some
criticized the rulemaking, raising concerns
about whether the information gathered
would enable the CFTC to monitor
commodity pools for systemic risk
effectively.6 They likewise questioned
4 See Commodity Pool Operators and Commodity
Trading Advisors: Compliance Obligations, 77 FR
11252 (Feb. 24, 2012).
5 See Commodity Pool Operators and Commodity
Trading Advisors: Amendments to Compliance
Obligations, 76 FR 7976, 7981 (Form CPO–PQR
Proposal) (Feb. 11, 2011).
6 See, e.g., Jill E. Sommers, Commissioner, CFTC,
Dissenting Statement, Commodity Pool Operators
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Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Proposed Rules
whether the CFTC even had the resources to
do so and in fact would do so.7
Sound Regulation Means Collecting
Information We Intend To Use
What we need is not over-regulation or
even de-regulation, but rather sound
regulation.8 In the midst of the coronavirus
pandemic, when we are facing the greatest
economic challenge since the 2008 financial
crisis, and possibly since the Great
Depression, the fact that we are asking
market participants to put all this time and
effort into providing us data that is difficult
to integrate with the CFTC’s other more
timely and standardized data streams is not
sound regulation. Frankly, it is wasteful and
an example of bad government.
My colleague Commissioner Dan Berkovitz
recently made the following observation: ‘‘In
addition to obtaining accurate data, the
Commission must also develop the tools and
resources to analyze that data.’’ 9 He is spot
on. I believe the converse is also true. We
should not collect data we cannot use
effectively. In the case of Form CPO–PQR,
this means not requiring market participants
to provide information that the CFTC has
neither the resources nor the ability to
analyze with our other data streams. Our
credibility as a regulator is strengthened
when we honestly admit that our regulations
ask for data that we both have not used
effectively and have no intention of using
going forward. That is what we are doing
today.
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Alternative Sources of Data Are Available to
the Commission
Although we would be eliminating some
components of Form CPO–PQR—those
required data that the CFTC has not used in
meeting its mission—Form CPO–PQR is not
our only source of data regarding commodity
pools. The CFTC has devoted substantial
resources to developing other data streams
and regulatory initiatives designed to
enhance our ability to surveil financial
markets for risk posed by all manner of
market participants, including CPOs and
their operated pools. These data streams
include extensive information related to
trading, reporting, and clearing of swaps.
Importantly, most of the transaction and
position information the CFTC uses for our
surveillance activities is available on a more
timely and frequent basis than the data
received on the current iteration of Form
CPO–PQR. Furthermore, CFTC programs to
conduct surveillance of exchanges,
clearinghouses, and futures commission
merchants already include CPOs and do not
rely on the information contained in
Schedules B and C of Form CPO–PQR.
and Commodity Trading Advisors: Amendments to
Compliance Obligations (Feb. 9, 2012), available
https://www.cftc.gov/PressRoom/Speeches
Testimony/sommersstatement020912a.
7 Id.
8 See CFTC Vision Statement, available https://
www.cftc.gov/About/Mission/index.htm.
9 Dan M. Berkovitz, Commissioner, CFTC,
Statement on Proposed Amendments to Parts 45,
46, and 49: Swap Data Reporting Requirements
(Feb. 20, 2020), available https://www.cftc.gov/Press
Room/SpeechesTestimony/berkovitzstatement
022020b.
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Taken together, the CFTC’s other existing
data efforts have enhanced our ability to
surveil financial markets, including with
respect to the activities of CPOs and the
pools they operate. In general, the CFTC’s
alternate data streams provide a more timely,
standardized, and reliable view into relevant
market activity than that provided under
Form CPO–PQR. The proposal contemplates
a revised Form CPO–PQR that would be more
easily integrated with these existing and
more developed data streams. This would
enable the CFTC to oversee and assess the
impact of CPOs and their operated pools in
a way that is both more effective for us and
less burdensome for those we regulate.
Legal Entity Identifiers Are Something We
Need
Our proposal does more than simply
eliminate certain data collections. It would
also require the collection of an additional
piece of key information: Legal entity
identifiers (‘‘LEIs’’) for CPOs and their
operated pools. LEIs are critical to
understanding the activities and
interconnectedness within financial markets.
Although LEIs have been around since 2012
and authorities in over 40 jurisdictions have
mandated the use of LEI codes to identify
legal entities involved in a financial
transaction,10 this would be a new
requirement for Form CPO–PQR. The lack of
LEI information for CPOs and their operated
pools has made it challenging to align the
data collected on Form CPO–PQR with the
data received from exchanges,
clearinghouses, swap data repositories, and
futures commission merchants. As a result,
we cannot always get a full picture of what
is happening in the markets we regulate.
The Commission is therefore proposing to
amend Form CPO–PQR to include a question
seeking the LEIs of both CPOs and the
operated pools. The inclusion of LEIs within
this smaller data set on the amended Form
CPO–PQR should enable the CFTC to
synthesize the various data streams on an
entity-by-entity basis more efficiently and
accurately. Inclusion of LEIs may also permit
better use of swap data repository and other
data to illuminate any risks inherent in pools
and pool families.
In addition, the proposal would better
align Form CPO–PQR with Form PQR of the
NFA, which all CPOs must file quarterly and
which the NFA may revise to include
questions regarding LEIs. Under these
circumstances, we could permit a CPO to file
NFA Form PQR in lieu of our Form CPO–
PQR as revised. In doing so, we would offer
CPOs greater filing efficiencies without
compromising our ability to obtain relevant
data.
26411
vulnerabilities.11 It was contemplated that
the OFR would have access to data from
other U.S. financial regulators. Yet to date,
the CFTC has shared none of the Form CPO–
PQR data with the OFR, largely because of
the shortcomings outlined above.
Another benefit of today’s proposal is that
we intend to share with the OFR the
information collected on Form CPO–PQR
once it is revised. To this end, we are
presently in the process of negotiating a
memorandum of understanding with the
OFR, which will allow us for the first time
to provide the information we collect
regarding CPOs.
Conclusion
For these reasons, I am pleased to support
the Commission’s proposal to amend the
compliance requirements for CPOs on Form
CPO–PQR. Form CPO–PQR as revised would
focus on the collection of data elements that
can be used with other CFTC data streams
and regulatory initiatives to facilitate
oversight of CPOs and their pools. The
proposal would reduce data collection
requirements for market participants, while
mandating disclosure of LEIs by CPOs and
their operated pools. Focusing on enhancing
data collection by the agency is no doubt
tedious. Nonetheless, I am convinced it leads
to smarter regulation that helps promote the
integrity, resilience, and vibrancy of U.S.
derivatives markets.
Appendix 3—Supporting Statement of
Commissioner Brian Quintenz
Data Sharing With the OFR Could Be
Improved
The Dodd-Frank Act established the Office
of Financial Research (‘‘OFR’’) nearly a
decade ago to look across our financial
system for risks and potential
I support today’s proposal that would
simplify and streamline the reporting
obligations of commodity pool operators
(CPOs) on Form CPO–PQR. The proposal
would eliminate much of existing Schedules
B and C, which together contain roughly 72
distinct questions, if one includes all the
separately identifiable subparts. Many of
these questions are challenging for CPOs to
calculate precisely and require numerous
underlying assumptions that vary from firm
to firm, making it difficult, if not impossible,
for the Commission to perform an apples-toapples comparison across the commodity
pool industry.
Moreover, in my opinion, many of these
questions are more academic than pragmatic
in nature—information that may be nice for
the Commission to have, but data that is
certainly not necessary for the Commission to
effectively oversee commodity pools and the
derivatives markets. For example, under the
proposal, the Commission would no longer
request information about the geographical
breakdown of a pool’s investments or the
aggregate value of a pool’s derivatives
positions—the latter of which provides
almost no insight into a pool’s actual risk
because it does not take into account
collateral. I would also note that large pools
file the Form CPO–PQR within 60 days of the
end of a calendar quarter. This means that by
the time Commission staff receives the
10 See Financial Stability Board, Thematic Review
on Implementation of the Legal Entity Identifier,
Peer Review Report (May 28, 2019), available
https://www.fsb.org/wp-content/uploads/P2805192.pdf.
11 See Sections 151–56 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, Public
Law 111–203, 124 Stat. 1376 (2010), available
https://www.gpo.gov/fdsys/pkg/PLAW-111publ203/
pdf/PLAW-111publ203.pdf.
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information on the form, it is already stale
and out-of-date, which seriously diminishes
its utility for purposes of real-time
monitoring of risk or market activity.
Importantly, the proposal retains questions
regarding a pool’s schedule of investments,
which contains information that is critical for
the National Futures Association’s and the
Commission’s supervision and examination
programs for CPOs. The proposed revisions
to Form CPO–PQR would also align the
Commission’s form with the NFA’s Form
PQR, which will simplify the filing process
for CPOs and ensure the Commission has the
same visibility as the NFA into the
operations of CPOs. I am also pleased the
proposal would require CPOs and their
operated pools to include their legal entity
identifiers (LEIs), to the extent they have LEIs
due to their swap trading activity. The
inclusion of LEIs will enable the Commission
to aggregate the information reported on the
Form CPO–PQR with the swap data
information reported to the Commission
under Part 45. Over time, I hope this will
provide the Commission with a greater
understanding of how a CPO’s swap
activities complement its other investment
activities.
The proposal also requests comment on
whether there are ways the Commission
could clarify or refine its instructions for
completing the Form CPO–PQR. I encourage
market participants to take a close look at the
form’s instructions and related frequently
asked questions documents to determine if
the filling process can be simplified.
In closing, I would like to thank the
Division of Swap Dealer and Intermediary
Oversight for its hard work in advancing this
important proposal.
jbell on DSKJLSW7X2PROD with PROPOSALS
Appendix 4—Concurring Statement of
Commissioner Rostin Behnam
I respectfully concur with the Commodity
Futures Trading Commission’s (the
‘‘Commission’’ or ‘‘CFTC’’) issuance of a
proposed rule (the ‘‘Proposal’’) to amend
Regulation 4.27 and Form CPO–PQR. In
devising the Proposal, Commission staff
judiciously evaluated several years of returns
on the Commission’s collection of detailed
data from commodity pool operators
(CPOs)—data anticipated to provide valuable
insights to both the Commission and the
Financial Stability Oversight Counsel (FSOC)
as we collectively moved into a new era of
Wall Street reform on the heels of the 2008
financial crisis. In my view, the general
conclusion that the Proposal elucidates: the
information collected in the current Form
CPO–PQR as well as its frequency of
collection is simply not fit for purpose.
The determination to bring seven years of
data collection aimed at supporting the goals
of the Dodd-Frank Act 1 to an abrupt end
may, in this particular instance, be an
appropriate revision. The Proposal intends to
markedly reduce the Commission’s collection
of granular, pool-specific data from a
significant population of CPOs. However, the
evidence suggests that the challenges of
1 The Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111–203, 124
Stat. 1376 (2010) (the ‘‘Dodd-Frank Act’’).
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17:15 May 01, 2020
Jkt 250001
working with such data have undercut its
potential value. Therefore, any data loss
should not undermine the Commission’s
oversight or FSOC’s current monitoring
efforts. At this point in time, the Commission
should take the opportunity to make
strategic, programmatic and disciplined
changes.
In terms of the data and the transactions
the Commission thought possible within our
Form CPO–PQR database, results have been
mixed. The Proposal aims to make targeted
corrections, without forgoing the possibility
of future adjustments should the Commission
later determine that additional data
collection would support regulatory
initiatives or would be responsive to FSOC
requirements to fulfill statutorily mandated
duties and initiatives aimed at identifying
and monitoring risks to financial stability.2
The 2008 financial crisis exposed
numerous weaknesses in the U.S. financial
regulatory framework. Unfortunately, many
were at the expense of main street
Americans. The legislative response was
swift and effective in reforming our nation’s
financial regulatory regime. One of the more
pressing needs that the Dodd-Frank Act
addressed relates to data collection and
analysis as a tool to monitor, surveil and
detect financial market risk. All with the
intention of anticipating and catching
stability and resiliency concerns before it is
too late. As all U.S. regulators continue to
adapt to the new framework—even a decade
later—adopting reforms quickly in some
cases, and more gradually in others, we all
collectively continue to learn and develop
better practices at data collection and
analysis. Although not perfect, our regulatory
purpose and mission is clear, and the
importance of efficient and effective data to
fulfilling our statutory mandate cannot be
understated. As we all are experiencing the
evolution of the nation’s tech economy, it is
hard to ignore the engine of its success: Data.
This is the world we live in, and
policymakers and regulators alike must keep
pace while exercising appropriate discipline
in collecting, handling, and managing data.
This Proposal focuses on the Commission’s
data needs in support of CPO and commodity
pool oversight. The Proposal seeks to account
for: (1) Other data streams, regulatory
initiatives, and risk surveillance programs
that support the Commission’s monitoring of
CPO and commodity pool activities as
enhanced by improvements to the
Commission’s data integration and analysis
capabilities; (2) the Commission’s statutory
obligations to make data available to the
FSOC and the impact of the proposed
2 See Proposal at I. Not only is the Commission
among those agencies that could be asked to
provide information necessary for the FSOC to
perform its statutorily mandated duties, but the
FSOC may issue recommendations to the
Commission regarding more stringent regulation of
financial activities that FSOC determines may
create or increase systemic risk. See Dodd-Frank
Act §§ 112(d)(1), 120; See also Reporting by
Investment Advisers to Private Funds and Certain
Commodity Pool Operators and Commodity
Trading Advisors on Form PF, 76 FR 71128, 71129
(Nov. 16, 2011); Commodity Pool Operators and
Commodity Trading Advisors: Compliance
Obligations, 77 FR 11252, 11253 (Feb. 24, 2012).
PO 00000
Frm 00044
Fmt 4702
Sfmt 4702
amendments on FSOC’s monitoring abilities;
(3) the duties of CPOs that are dually
registered with the Securities and Exchange
Commission (SEC) as private fund advisors
and are required to file Form PF as well as
the scope of current Form PF; (4) the data
elicited by the National Futures Association’s
(NFA’s) Form PQR, a form comparable to
Form CPO–PQR filed by all CFTC-registered
CPOs, regardless of size, used to support
NFA’s risk-based examination program for
CPOs; and (5) reduced reporting burdens and
increased filing efficiencies for affected
CPOs. I appreciate the Commission’s and its
staff’s ongoing engagement with the SEC and
FSOC, as well as with NFA, throughout the
drafting of this Proposal and am encouraged
that discussions are ongoing. I also
appreciate staff’s consideration and inclusion
of several of my suggested edits to this
Proposal.
I support issuance of the Proposal;
however, I am concerned that in proposing
to amend Regulation 4.27(d) to no longer
accept Form PF filing in lieu of the proposed
revised Form CPO–PQR, less data may be
collected on Form PF from dually regulated
CPOs.3 Should the Proposal be finalized in
its current form, FSOC may receive less data
from certain CPOs who have been reporting
information on commodity pools that are not
private funds in the data they report on Form
PF in lieu of filing Form CPO–PQR for such
pools, as currently permitted under
Regulation 4.27(d). To the extent the
Proposal may have the side-effect of
undermining ongoing FSOC surveillance and
monitoring efforts by eliminating the
incentivized reporting of CFTC-pool only
information on Form PF, I urge members of
the public to respond to related requests for
comment embedded in the Proposal.4
Notwithstanding my concerns, I am pleased
that, to the extent the interests of the SEC and
FSOC may be impacted, each has had and
continues to have ample opportunity to
weigh-in. Moreover, should the FSOC
determine that it requires additional data
from dually regulated CPOs or CPOs
generally; it has authority to request such
data submissions directly from the
Commission or, alternatively, consult with
the SEC—and more indirectly, with the
CFTC—regarding the form and content of
Form PF.5
I would like to close by again thanking staff
for all of their hard work on this important
Proposal, specifically in these difficult and
unique times, and look forward to
considering comments from the public. To
that end, if needed, I encourage market
participants to request an extension of the
comment period. As we all continue to
endure the challenges of new realities at
home and in the workplace as a result of the
Covid–19 pandemic, I firmly believe the
Commission needs to be as flexible as
necessary to accommodate market
participants and the general public in their
efforts to provide us with the best comments
to rulemakings. I have made my position
clear on what and how the Commission
3 See
Proposal at III.C.
Proposal at IV.
5 See note 2.
4 See
E:\FR\FM\04MYP1.SGM
04MYP1
Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Proposed Rules
should be allocating its resources during
these unprecedented times.
Appendix 6—Statement of
Commissioner Dan M. Berkovitz
jbell on DSKJLSW7X2PROD with PROPOSALS
I am voting in favor of this proposed rule
to amend Regulation 4.27 and Form CPO–
PQR (‘‘Proposal’’). The information in Form
CPO–PQR that no longer would be required
under the Proposal has not proven to be
useful to the Commission in identifying or
measuring systemic or idiosyncratic risk.
In the wake of the financial crisis and the
enactment of the Dodd-Frank Act, the
Commission required certain commodity
pool operators (‘‘CPOs’’) to report on Form
CPO–PQR a variety of data that, at the time,
the Commission believed would enable it to
assess risks presented by pooled commodity
investment vehicles, such as a pool’s
exposure to certain asset classes and
susceptibility to market stress.1 As the
Proposal explains, however, the
Commission’s experience over the past seven
years has unfortunately demonstrated that
some of the information on Schedules B and
C of Form CPO–PQR has not been useful for
these purposes. The Proposal would amend
the Form CPO–PQR requirements to
eliminate the information that has not proven
to be of value to the Commission, yet retain
the requirements to report useful
information, such as the pool schedule of
investments.2
At the same time as the Commission
streamlines its data collection requirements,
it must also make better use of the data that
it does collect. The Commission gathers a
diverse and large array of data on a daily
basis for over-the-counter and exchangetraded derivatives transactions.3 As the
Proposal notes, these data sets have the
potential to be more useful for risk
monitoring and surveillance purposes than
certain static information collected quarterly
through Form CPO–PQR. But the
Commission still has a long way to go before
it can use such data to perform a
comprehensive, forward-looking analysis of
our markets. The Commission should
improve its strategies and capabilities for
aggregating and analyzing the information it
will continue to receive.
The Proposal would take one step in this
direction by requiring CPOs using the swap
markets to report legal entity identifiers
(‘‘LEIs’’). Collecting LEIs is important
because they allow the Commission to
aggregate SDR data from related pools,
thereby furthering our understanding of the
role these pools play in our markets.
1 See Final Rule, Commodity Pool Operators and
Commodity Trading Advisors: Amendments to
Compliance Obligations, 77 FR 11252, 11252 (Feb.
24, 2012).
2 ‘‘The eliminated data elements include detailed,
pool-specific information, provided on both the
individual and aggregate level, such as questions
about investment strategy and counterparty credit
exposure, asset liquidity and concentration of
positions, clearing relationships, risk metrics,
financing, and investor composition.’’ Proposal,
Amendments to Compliance Requirements for
Commodity Pool Operators on Form CPO–PQR, at
Sect. III.A.
3 See generally id. at Sect. III.
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17:15 May 01, 2020
Jkt 250001
However, the Proposal does not require all
firms, such as those that do not trade swaps,
to obtain and report LEIs, so this amendment
will not allow the Commission to aggregate
all derivatives transactions by pools under
common control. The Commission can and
should do more to integrate and analyze all
of the data at its disposal.
Finally, I am pleased that the comment
period for this Proposal is 60 days. Providing
the public with sufficient time to prepare
meaningful comments to our rules in these
extraordinary times is good public policy.
I encourage the public to comment on this
Proposal. In particular, the Proposal
acknowledges that by removing from Form
CPO–PQR some of the pool-specific data in
Schedules B and C, less information would
be available to the Financial Stability
Oversight Counsel (‘‘FSOC’’). The Proposal
also notes, however, that FSOC otherwise
receives comparable data for the large portion
of dually registered CPOs via Form PF. I am
interested in commenters’ views on whether
this amendment would affect FSOC’s ability
to monitor for systemic risk.
I would like to thank the staff, particularly
the Division of Swap Dealer and
Intermediary Oversight, for their engagement
with my office on this Proposal. I look
forward to the Commission articulating
further steps to enhance its surveillance of
commodity pools, and our markets more
broadly.
[FR Doc. 2020–08496 Filed 5–1–20; 8:45 am]
BILLING CODE 6351–01–P
DEPARTMENT OF THE INTERIOR
Office of Surface Mining Reclamation
and Enforcement
30 CFR Part 935
[SATS No. OH–258–FOR; Docket ID: OSM–
2017–0005; S1D1S SS08011000 SX064A000
201S180110 S2D2S SS08011000 SX064A000
20XS501520]
Ohio Regulatory Program
Office of Surface Mining
Reclamation and Enforcement, Interior.
ACTION: Proposed rule; public comment
period and opportunity for public
hearing on proposed amendment.
AGENCY:
We, the Office of Surface
Mining Reclamation and Enforcement
(OSMRE), are announcing receipt of a
proposed amendment to the Ohio
regulatory program (hereinafter, the
Ohio program) under the Surface
Mining Control and Reclamation Act of
1977 (SMCRA or the Act). Through this
proposed amendment, Ohio is
requesting to modify 41 rules to the
Ohio Administrative Code, including,
but not limited to, permit applications,
hydrologic map and cross sections,
general map requirements, requirements
for permits for special categories of
SUMMARY:
PO 00000
Frm 00045
Fmt 4702
Sfmt 4702
26413
mining, underground mining permit
application, small operator assistance
program, and self-bonding etc. This
document gives the times and locations
that the Ohio program and this
proposed amendment to that program
are available for your inspection, the
comment period during which you may
submit written comments on the
amendment, and the procedures that we
will follow for the public hearing, if one
is requested.
DATES: We will accept written
comments on this amendment until 4
p.m., Eastern Standard Time (e.s.t.),
June 3, 2020. If requested, we will hold
a public hearing on the amendment on
May 29, 2020. We will accept requests
to speak at a hearing until 4 p.m., e.s.t.
on May 19, 2020.
ADDRESSES: You may submit comments,
identified by SATS No. OH–258–FOR,
by any of the following methods:
• Mail/Hand Delivery: Mr. Ben
Owens, Field Office Director, Pittsburgh
Field Office, Office of Surface Mining
Reclamation and Enforcement, 3
Parkway Center, Pittsburgh, Pa 15220.
• Fax: (412) 937–2177.
• Federal eRulemaking Portal: The
amendment has been assigned Docket
ID: OSM–2017–0005. If you would like
to submit comments go to https://
www.regulations.gov. Follow the
instructions for submitting comments.
Instructions: All submissions received
must include the agency name and
docket number for this rulemaking. For
detailed instructions on submitting
comments and additional information
on the rulemaking process, see the
‘‘Public Comment Procedures’’ heading
of the SUPPLEMENTARY INFORMATION
section of this document.
Docket: For access to the docket to
review copies of the Ohio program, this
amendment, a listing of any scheduled
public hearings, and all written
comments received in response to this
document, you must go to the address
listed below during normal business
hours, Monday through Friday,
excluding holidays. You may receive
one free copy of the amendment by
contacting OSMRE’s Pittsburgh Field
Office or the full text of the program
amendment is available for you to read
at www.regulations.gov.
Mr. Ben Owens, Field Office Director,
Pittsburgh Field Office, Office of
Surface Mining Reclamation and
Enforcement, 3 Parkway Center,
Pittsburgh, Pa 15220, Telephone:
(412) 937–2827, email: bowens@
osmre.gov.
In addition, you may review a copy of
the amendment during regular business
hours at the following location:
E:\FR\FM\04MYP1.SGM
04MYP1
]]>Agencies
[Federal Register Volume 85, Number 86 (Monday, May 4, 2020)]
[Proposed Rules]
[Pages 26378-26413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08496]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 4
RIN 3038-AE98
Amendments to Compliance Requirements for Commodity Pool
Operators on Form CPO-PQR
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Commodity Futures Trading Commission (CFTC or Commission)
is proposing amendments to agency regulations on Commodity Pool
Operators. Specifically, the proposal would eliminate the pool-specific
reporting requirements in existing Schedules B and C of Form CPO-PQR,
other than the pool schedule of investments, and amend the information
in existing Schedule A of the form to request Legal Entity Identifiers
(LEIs) for commodity pool operators (CPOs) and their operated pools
that have them, and to eliminate questions regarding pool auditors and
marketers. All CPOs would be required to file the resulting amended
Form CPO-PQR quarterly, but would also be allowed to file NFA Form PQR,
a comparable form required by the National Futures Association (NFA),
in lieu of filing the revised Form CPO-PQR. Relatedly, the Commission
would also no longer accept filing Form PF in lieu of the revised Form
CPO-PQR. The Commission preliminarily believes that these amendments
would focus Form CPO-PQR on data elements that facilitate the
Commission's oversight of CPOs and their pools in connection with its
use of other Commission data streams and regulatory initiatives while
reducing overall data collection requirements for market participants.
DATES: Comments must be received on or before June 15, 2020.
ADDRESSES: You may submit comments, identified by RIN number 3038-AE98,
by any of the following methods:
CFTC Comments Portal: https://comments.cftc.gov. Select
the ``Submit Comments'' link for this rulemaking and follow the
instructions on the Public Comment Form.
Mail: Christopher Kirkpatrick, Secretary of the
Commission, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street NW, Washington, DC 20581.
Hand Delivery/Courier: Follow the same instructions as for
Mail, above.
Please submit your comments using only one of these methods.
Submissions through the CFTC Comments Portal are encouraged.
All comments must be submitted in English, or if not, accompanied
by an English translation. Comments will be posted as received to
https://comments.cftc.gov. You should submit only information that you
wish to make available publicly. If you wish the Commission to consider
information that you believe is exempt from disclosure under the
Freedom of Information Act (FOIA), a petition for confidential
treatment of the exempt information may be submitted according to the
procedures established in Commission Regulation 145.9.\1\
---------------------------------------------------------------------------
\1\ 17 CFR 145.9. The Commission's regulations are found at 17
CFR Ch. I (2019).
---------------------------------------------------------------------------
The Commission reserves the right, but shall have no obligation, to
review, pre-screen, filter, redact, refuse or remove any or all of your
submission from https://comments.cftc.gov that it
[[Page 26379]]
may deem to be inappropriate for publication, such as obscene language.
All submissions that have been redacted or removed that contain
comments on the merits of the rulemaking will be retained in the public
comment file and will be considered as required under the
Administrative Procedure Act and other applicable laws, and may be
---------------------------------------------------------------------------
accessible under the FOIA.
FOR FURTHER INFORMATION CONTACT: Joshua B. Sterling, Director, at 202-
418-6700 or [email protected]; Amanda Lesher Olear, Deputy Director,
at 202-418-5283 or [email protected]; Division of Swap Dealer and
Intermediary Oversight, Commodity Futures Trading Commission, Three
Lafayette Centre, 1151 21st Street NW, Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Introduction
Section 1a(11) of the Commodity Exchange Act (CEA or the Act) \2\
defines the term ``commodity pool operator'' (CPO), as any person \3\
engaged in a business that is of the nature of a commodity pool,
investment trust, syndicate, or similar form of enterprise, and who,
with respect to that commodity pool, solicits, accepts, or receives
from others, funds, securities, or property, either directly or through
capital contributions, the sale of stock or other forms of securities,
or otherwise, for the purpose of trading in commodity interests.\4\ CEA
section 4m generally requires each person who satisfies the CPO
definition to register as such with the Commission.\5\ CEA section 4n
requires registered CPOs to maintain books and records and file such
reports in such form and manner as may be prescribed by the
Commission.\6\
---------------------------------------------------------------------------
\2\ 7 U.S.C. 1, et seq. (2019). The Act is accessible through
the Commission's website, https://www.cftc.gov.
\3\ See 17 CFR 1.3 (defining ``person'' to include individuals,
associations, partnerships, corporations, and trusts).
\4\ 7 U.S.C. 1a(11).
\5\ 7 U.S.C. 6m(1).
\6\ 7 U.S.C. 6n(3)(A). Registered CPOs have regulatory reporting
obligations with respect to their operated pools. See 17 CFR. 4.22.
---------------------------------------------------------------------------
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection
Act (Dodd-Frank Act) \7\ amended the Investment Advisers Act of 1940
(Advisers Act) \8\ to require advisers to large private funds \9\ to
register with the Securities and Exchange Commission. (SEC).\10\
Congress further directed the SEC to adopt rules requiring registered
private fund advisers \11\ to file reports containing such information
as is deemed necessary and appropriate in the public interest and for
investor protection and for the assessment of systemic risk.\12\
Pursuant to section 204 of the Advisers Act, as amended, those records
and reports must include, among other things, a description of the
amount of assets under management, use of leverage, counterparty credit
risk exposure, and trading and investment positions for each private
fund advised by the adviser.\13\ These records and reports must also be
made available to the Financial Stability Oversight Counsel (FSOC).\14\
Through these requirements, Congress sought to make available to the
SEC and FSOC information regarding the size, strategies, and positions
of large private funds, which Congress believed could be crucial to
regulatory attempts to deal with a future crisis.\15\
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\7\ Public Law 111-203, 124 Stat. 1376 (2010).
\8\ 15 U.S.C. 80b-1 et seq. (2019).
\9\ Section 202(a)(29) of the Advisers Act defines the term
``private fund'' as ``an issuer that would be an investment company,
as defined in section 3 of the Investment Company Act of 1940 (15
U.S.C. 80a-3), but for section 3(c)(1) or 3(c)(7) of that Act.'' See
15 U.S.C. 80ab-2(a)(29).
\10\ See Dodd-Frank Act section 403 of the (amending Advisers
Act 203(b), 15 U.S.C. 80b-3(b), to incorporate private fund adviser
registration); Dodd-Frank Act sections 402, 407, 408 (establishing
certain exemptions from private fund adviser registration); Advisers
Act section 202(a)(29), 15 U.S.C. 80a-3 (defining ``private fund'').
\11\ As used in this release, the term ``private fund adviser''
refers to any investment adviser that is: (i) Registered or required
to be registered with the SEC (including any investment adviser that
is also registered or required to be registered with the CFTC as a
CPO or CTA); and (ii) advises one or more private funds (including
any commodity pools that satisfy the definition of ``private
fund'').
\12\ See Dodd-Frank Act section 404; Advisers Act section 204,
15 U.S.C. 80b-4(b)(5). See also 15 U.S.C. 80b-4(b)(1) (authorizing
the SEC to require each investment adviser to a private fund to file
reports containing such information as the SEC deems necessary and
appropriate in the public interest or for the protection of
investors or for the assessment of systemic risk by the Financial
Stability Oversight Council).
\13\ 15 U.S.C. 80b-4(b)(3).
\14\ 15 U.S.C. 80b-4(b)(7).
\15\ Commodity Pool Operators and Commodity Trading Advisors:
Amendments to Compliance Obligations, 76 FR 7976, 7977 (Form CPO-PQR
Proposal) (Feb. 11, 2011) (citing S. Conf. Rep. No. 111-176, at 38
(2010)).
---------------------------------------------------------------------------
Pursuant to Advisers Act section 211, as amended, rules
establishing the form and content of reports filed by private fund
advisers that are dually registered with the SEC and the CFTC
(together, the Commissions) must be promulgated jointly by both
agencies after consultation with FSOC.\16\ Accordingly, in 2011 the
Commissions jointly adopted sections 1 and 2 of Form PF.\17\ In
adopting Form PF, the Commissions stated that the form was designed to
provide FSOC empirical data from which it may make a determination
about the extent to which the activities of private funds or their
advisers pose systemic risk.\18\ The SEC added that the policy
judgements implicit in the Form PF reporting requirements reflected
FSOC's role as the primary user of the reported information and that
the SEC would not necessarily have required the same scope of reporting
if the information reported on Form PF were intended solely for the
SEC's use.\19\
---------------------------------------------------------------------------
\16\ 15 U.S.C. 80b-11(e).
\17\ See Reporting by Investment Advisers to Private Funds and
Certain Commodity Pool Operators and Commodity Trading Advisors on
Form PF, 76 FR 71128 (Nov. 16, 2011) (Form PF Final Rule). Sections
3 and 4 of Form PF were adopted solely by the SEC. Id.
\18\ Id. at 71129.
\19\ Id. at 71129-30.
---------------------------------------------------------------------------
Following the adoption of Form PF, and on its own initiative, the
Commission adopted its own new reporting requirement for CPOs: Form
CPO-PQR and Sec. 4.27, which requires certain CPOs to report on Form
CPO-PQR.\20\ The Commission proposed this new reporting requirement
after reevaluating its regulatory approach to CPOs in light of the 2008
financial crisis and the purposes and goals of the Dodd-Frank Act so as
to determine the necessary level of regulation in the then-current
economic environment. The amendments to Part 4, including this new
reporting requirement, were intended to: (1) Align the Commission's
regulatory structure for CPOs with the purposes of the Dodd-Frank Act;
(2) encourage more congruent and consistent regulation of similarly
situated entities among Federal financial regulatory agencies, such as
dually registered CPOs required to file Form PF; (3) improve
accountability and increase transparency of the activities of CPOs and
the commodity pools that they operate or advise; and (4) facilitate a
data collection that would potentially assist FSOC.\21\ To that end,
the requirements of Form CPO-PQR were modeled closely after those of
Form PF.\22\
---------------------------------------------------------------------------
\20\ See Commodity Pool Operators and Commodity Trading
Advisors: Compliance Obligations, 77 FR 11252 (Feb. 24, 2012) (Form
CPO-PQR Final Rule); 17 CFR pt. 4 app. A; 17 CFR 4.27.
\21\ Form CPO-PQR Proposal, 76 FR at 7978.
\22\ Id. at 7978 (``The Commission proposes [Form CPO-PQR] to
solicit information that is generally identical to that sought
through Form PF . . .''). Section 4.27 further provides for the
filing of Form PF in lieu of Commission filing requirements (i.e.,
Form CPO-PQR) for CPOs that are dually registered with the SEC. See
17 CFR 4.27(d).
---------------------------------------------------------------------------
In adopting Form CPO-PQR, the Commission indicated that the
collected data would be used for several broad purposes, including:
Increasing the Commission's understanding of its registrant population;
assessing the market risk associated with pooled
[[Page 26380]]
investment vehicles under its jurisdiction; and monitoring for systemic
risk.\23\ Specifically, the Commission was interested in receiving
information regarding the operations of CPOs and their pools, including
their participation in commodity interest markets, their relationships
with intermediaries, and their interconnectedness with the financial
system at large.\24\ In proposing the majority of the more pool-
specific questions in the form in particular, the Commission believed
the incoming data would assist the Commission in monitoring commodity
pools in such a way as to allow the Commission to identify trends over
time, including a pool's exposure to asset classes, the composition and
liquidity of a commodity pool's portfolio, and a pool's susceptibility
to failure in times of stress.\25\ Although the Commission recognized
that the data had some limitations, it believed that, in light of the
2008 financial crisis and the sources of risk delineated in the Dodd-
Frank Act with respect to private funds, the detailed, pool-specific
information to be provided in Form CPO-PQR was necessary and
appropriately balanced to assess the risks posed by a pool or a CPO's
operations as a whole.\26\
---------------------------------------------------------------------------
\23\ See Form CPO-PQR Final Rule, 77 FR 11252.
\24\ Id. at 11266.
\25\ Form CPO-PQR Proposal, 76 FR at 7981.
\26\ Id.
---------------------------------------------------------------------------
After seven years of experience with Form CPO-PQR, the Commission
is reassessing the scope of Form CPO-PQR and how it aligns with the
Commission's current regulatory priorities. The Commission's ability to
make full use of the more detailed information collected under Form
CPO-PQR has not met the Commission's initial expectations. At the same
time, however, the Commission has devoted substantial resources to
developing other data streams and regulatory initiatives designed to
enhance its ability to broadly surveil financial markets for risk posed
by all manner of market participants, including CPOs and their operated
pools.
Under these circumstances, and as further explained in discussion
that follows, the Commission preliminarily believes that Form CPO-PQR
could be revised in a way that would support the Commission's ability
to exercise its oversight of CPOs and their operated pools while
reducing reporting burdens for market participants, thereby further
promoting the integrity, resilience, and vibrancy of the U.S.
derivatives markets.
II. Overview of Current Form CPO-PQR
The amount of information that a CPO is currently required to
disclose on Form CPO-PQR varies depending on the size of the operator
and the size of the operated pools.\27\ The form identifies three
classes of filers: Large CPOs, Mid-Sized CPOs, and Small CPOs. The
thresholds for determining Large and Mid-Sized CPOs generally align
with those in Form PF: \28\ A Large CPO is a CPO that had at least $1.5
billion in aggregated pool assets under management (AUM) \29\ as of the
close of business on any day during the reporting period; a Mid-Sized
CPO is a CPO that had at least $150 million, but less than $1.5
billion, in aggregated pool AUM as of the close of business on any day
during the reporting period. Although not defined in Form CPO-PQR,
``Small CPO,'' as used herein, refers to a CPO that is not a Large CPO
or a Mid-Sized CPO, i.e., a CPO that had less than $150 million in
aggregated pool AUM during the entire reporting period. The reporting
period for Large CPOs is any of the individual calendar quarters
(ending March 31, June 30, September 30, and December 31); for Small
and Mid-Sized CPOs, the reporting period is the calendar year-end.
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\27\ See 17 CFR pt. 4 app. A.
\28\ See Instructions to Form PF, available at https://www.sec.gov/about/forms/formpf.pdf. Private fund investment advisers
with ``regulatory AUM,'' as that term is defined in Form PF, of at
least $150 million are required to file Section 1 of Form PF;
private fund investment advisers with regulatory AUM equal to or
exceeding $1.5 billion are required to file Sections 1 and 2 of Form
PF. Id.
\29\ AUM refers to the amount of all assets that are under the
control of the CPO. See 17 CFR pt. 4 app. A.
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Form CPO-PQR consists of three schedules: Schedules A, B, and C.
Schedule A requires all CPOs to disclose basic identifying information
about the CPO (Part 1) and about each of the CPO's pools and the
service providers they used (Part 2). Large CPOs submit Schedule A on a
quarterly basis; all other CPOs submit it annually. Schedule B requires
additional detailed information for each pool operated by Mid-Sized and
Large CPOs regarding each pool's investment strategy; borrowings and
types of creditors; counterparty credit exposure; trading and clearing
mechanisms; value of aggregated derivative positions; and a schedule of
investments. Large CPOs submit Schedule B on a quarterly basis, whereas
Mid-Sized CPOs submit it annually.
Schedule C requires further detailed information about the pools
operated by Large CPOs on an aggregate and pool-by-pool basis. Part 1
of Schedule C requires aggregate information for all pools operated by
a Large CPO, including (1) a geographical breakdown of the pools'
investment on an aggregated basis and (2) the turnover rate of
aggregate portfolio of pools. Part 2 of Schedule C requires certain
detailed information for each Large Pool the Large CPO operates, where
a ``Large Pool'' is defined as a commodity pool that has a net asset
value (NAV) \30\ individually, or in combination with any parallel pool
structure,\31\ of at least $500 million as of the close of business on
any day during the reporting period.\32\ Specifically, Part 2 requires
information with respect to each Large Pool the Large CPO operates
during the given reporting period, including information regarding the
Large Pool's: (1) Identity; (2) liquidity; (3) counterparty credit
exposure; (4) risk metrics; (5) borrowing; (6) derivative positions and
posted collateral; (7) financing liquidity; (8) participant
information; and (9) the duration of its fixed income assets. Large
CPOs submit Schedule C on a quarterly basis and a separate Part 2 of
Schedule C on a quarterly basis for each Large Pool they operate during
the reporting period.
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\30\ The term ``net asset value'' has the same meaning as in
Commission regulation at Sec. 4.10(b). See id.
\31\ The term ``parallel pool structure'' means any structure in
which one or more pools pursues substantially the same investment
objective and strategy and invests side by side in substantially the
same assets as another pool. See id.
\32\ Id.
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If a CPO is dually registered with the SEC as an Investment Adviser
and is required to file Form PF regarding its advisory services to
private funds \33\ during the reporting period, the CPO is deemed to
have satisfied its Schedule B and Schedule C filing requirements by
completing and filing certain questions in Form PF.\34\
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\33\ The term ``private fund'' has the same meaning as the
definition of ``private fund'' in Form PF. 17 CFR pt. 4, app. A.
\34\ See id.
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In addition to Form PF and Form CPO-PQR, in 2010 NFA implemented
its form PQR (NFA Form PQR) to elicit data in support of a risk-based
examination program for CPOs.\35\ Pursuant to NFA Rule 2-46, all CPO
NFA members, which include all CPOs registered with the Commission,
must file NFA Form PQR on a quarterly basis.\36\ By rule, NFA accepts
the filing of Form CPO-PQR, but not Form PF, in lieu of filing its form
for any quarter in which a Form CPO-PQR filing is
[[Page 26381]]
required under Sec. 4.27. As such, dually-registered CPOs that file
Form PF in lieu of a Form CPO-PQR filing are currently required to file
NFA Form PQR with NFA quarterly.
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\35\ NFA Rule 2-46 (2010).
\36\ Id. All registered CPOs are required to be NFA members
pursuant to 17 CFR 170.17.
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III. Proposed Regulations
As indicated above, the Commission is proposing amendments to Form
CPO-PQR that would reduce the amount of reporting required thereunder
while still supporting the Commission's ability to oversee the
activities of CPOs and their operated pools. Specifically, the proposal
would eliminate the pool-specific information currently required to be
reported in Schedules B or C of the form, with the exception of the
pool schedule of investments (question 6 of Schedule B). The
information required in current Schedule A would remain with a few
amendments, notably the addition of questions regarding LEIs. The
retained reporting requirements--the reporting requirements in current
Schedule A, as proposed to be amended, plus the schedule of investments
from Schedule B--would be combined to form the entirety of Form CPO-
PQR, referred to herein as ``Revised Form CPO-PQR.'' The proposal would
require all CPOs to file Revised Form CPO-PQR on a quarterly basis, but
would permit CPOs to file a comparable form required by NFA, NFA Form
PQR, in lieu of Revised Form CPO-PQR. As a corollary, the Commission
would also revise Sec. 4.27(d) to eliminate the ability of dually
regulated CPOs that are required to file Form PF with respect to one or
more of their operated private funds to file Form PF in lieu of filing
current Form CPO-PQR, while retaining Form PF as the Commission's form.
The sections that follow explain these proposed changes in further
detail.
A. Elimination of Pool-Specific Reporting Requirements in Schedules B
and C
As mentioned above, the Commission is proposing to eliminate the
majority of the information required to be reported in current
Schedules B and C of Form CPO-PQR. The eliminated data elements include
detailed, pool-specific information, provided on both the individual
and aggregate level, such as questions about investment strategy and
counterparty credit exposure, asset liquidity and concentration of
positions, clearing relationships, risk metrics, financing, and
investor composition.
In adopting Form CPO-PQR, the Commission was interested in
receiving information regarding the operations of CPOs and their
operated pools, including their participation in commodity interest
markets, their relationships with intermediaries, and their
interconnectedness with the financial system at large.\37\ In proposing
the majority of the elements in Schedules B and C in particular, the
Commission believed they would assist the Commission in monitoring
commodity pools in such a way as to allow the Commission to identify
trends over time, including a pool's exposure to asset classes, the
composition and liquidity of a commodity pool's portfolio, and a pool's
susceptibility to failure in times of stress.\38\
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\37\ Form CPO-PQR Final Rule, 77 FR at 11266.
\38\ Form CPO-PQR Proposal, 76 FR at 7981.
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After seven years of experience with Form CPO-PQR, however, the
Commission acknowledges that challenges with the data collected in
Schedules B and C, combined with resource constraints in the face of
broader Commission priorities, have frustrated the Commission's ability
to fully realize that vision. To begin, in an effort to take into
account the different ways CPOs maintain information, the Commission
allowed CPOs flexibility in how they calculated and presented certain
of the data elements.\39\ For example, Form CPO-PQR gives Large CPOs
the option of reporting the duration, weighted average tenor, or 10-
year equivalents of fixed income portfolio holdings, understanding that
Large CPOs may use a wide range of metrics to measure interest rate
sensitivity. As a result, the Commission's ability to identify trends
across CPOs or pools using Form CPO-PQR data has been substantially
challenged.
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\39\ Form CPO-PQR Final Rule, 77 FR at 11271.
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Additionally, taking into account the volume and complexity of the
data it was requesting, the Commission determined not to require the
data to be provided in real-time but rather only mandated post hoc
quarterly or annual filings. The Commission acknowledged the
limitations of this filing schedule at the time but also recognized the
time it would take to produce the requested information and concluded
that Form CPO-PQR struck an appropriate balance in addressing the
Commission's need for timely information and providing CPOs sufficient
time to prepare it.\40\ As the Commission has reviewed the data over
the years, however, it has become apparent that the infrequent and
delayed nature of such reporting has made it difficult to assess the
impact of CPOs and their operated pools on markets as conditions and
that relative CPO risk profiles may have changed, potentially
significantly, by the time Form CPO PQR is filed with the Commission.
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\40\ Id. at 11267.
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Part of the Commission's rationale for promulgating Schedules B and
C was a need for additional information about CPOs that are non-dual
registrants to ``identify significant risk to the stability of the
derivatives market and the financial market as a whole.'' \41\ In
making the assessment that the information then available about the
operations of CPOs and their operated firms was insufficient, the
Commission focused primarily on the limited data that it received under
other provisions of Part 4, such as the annual pool financial
statements under Sec. 4.22, which it believed was not well suited for
the stated purpose of identifying risk to the either stability of the
derivatives markets or the financial markets in general.\42\ Moreover,
the Commission did not at the time believe that it had the capability
to use that information to assess the relationship between a large
position held by a pool and the rest of the pool's other derivatives
positions and securities investments.\43\
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\41\ Id. at 11266.
\42\ Form CPO-PQR Proposed Rule, 76 FR at 7978 (``The
information that the Commission currently receives is limited, not
designed to measure systemic or market risk in any meaningful way,
and is only submitted by registered CPOs on an annual basis.'').
\43\ Form CPO-PQR Final Rule, 77 FR at 11268.
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However, in the ten years since the Dodd-Frank Act was passed, the
Commission has devoted significant resources to regulatory initiatives
and data streams designed to enhance the Commission's ability to
broadly surveil financial markets for risk posed by all manner of
market participants, including CPOs. These data streams include
extensive information related to trading, reporting, and clearing of
swaps. Notably, the Commission has developed a regime requiring the
reporting of detailed swap transaction information to swap data
repositories (SDRs), including for those transactions entered into by
CPOs and the pools they operate.\44\ Specifically, swap transaction
data related to both over-the-counter and exchange traded swaps is
required to be reported to SDRs,\45\ and consequently, swaps entered
into by CPOs and pools, whether on an exchange or over-the-counter, are
reported to SDRs and included in the data set that Commission staff can
use to conduct broader market surveillance.
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\44\ See 17 CFR pts. 45; App. 1 to pt. 45, 49.
\45\ 17 CFR pt. 45.
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The Commission has also maintained, and in some instances enhanced,
its daily reporting regime for derivatives clearing organizations
(DCOs), clearing
[[Page 26382]]
members, designated contract markets (DCMs), futures commission
merchants (FCMs), swap dealers, and large traders. Commission
regulations require DCOs to make extensive daily reports, containing
information on the positions and activities of clearing members and
customers, including commodity pools, to the Commission.\46\ Commission
regulations also require reporting by clearing members and large
traders themselves.\47\ Through this data, the Commission can analyze
positions and risks at the DCO, clearing member, or customer level,
including customer positions at more than one clearing member, and
clearing member positions at more than one DCO.
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\46\ 17 CFR 39.19.
\47\ 17 CFR pt. 18.
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The Commission's risk surveillance program focuses on identifying,
quantifying, and monitoring the risks to the financial system posed by
DCOs, clearing participants, and other market participants--including
CPOs and their operated pools. To this end, on a daily basis,
Commission staff work to: (1) Identify positions in cleared products
that pose significant financial risk; and (2) confirm that these risks
are being appropriately managed. Staff undertakes these tasks at the
customer level, the firm level, and the DCO level. That is, staff
identifies both the customers that pose risks to clearing members and
clearing members that pose risks to DCOs.
Importantly, most of the transaction and position information the
Commission uses for its surveillance activities is available on a more
timely and frequent basis than the data received on the current
iteration of Form CPO-PQR. Furthermore, Commission programs to conduct
surveillance of exchanges, FCMs, and DCOs already include CPOs and do
not rely on the information contained in Schedules B and C of Form CPO-
PQR.
Taken together, these efforts have enhanced the Commission's
ability to broadly and actively surveil financial markets, including
with respect to the activities of CPOs and the pools they operate. In
general, the Commission's alternate data streams provide a more timely,
standardized, and reliable view into relevant market activity than that
provided under Form CPO-PQR, which make them much easier to combine
into a holistic surveillance program. Although none of the Commission's
current data streams offers a substitute for the more detailed, pool-
specific type of information set forth in Schedules B and C of Form
CPO-PQR, the Commission preliminarily believes that, taking into
account the Commission's current priorities and resource
availabilities, a Revised Form CPO-PQR that could be more easily
integrated with these existing and more developed data streams would
enable the Commission, with some additional data analysis, to oversee
and assess the impact of CPOs and their operated pools in the commodity
interest markets in an effective manner. The inclusion of the LEIs for
the CPO and its operated pools, as explained more fully below, would be
key to helping facilitate this integration with respect to CPOs and
pools that engage in the swaps markets. The Commission also
preliminarily believes that this improved data integration would
mitigate the need to engage in a more extensive, and likely more
burdensome, effort to improve the utility of the data fields requested
in current Schedules B and C.
The Commission notes that more than half of the largest CPOs and
pools are captured within the statutory definitions of private fund
investment advisers and private funds and as such are required to
report on Form PF.\48\ Other large asset managers that are registered
as CPOs and file Form CPO-PQR are sponsors or advisers to investment
companies registered under the Investment Company Act of 1940,\49\
which, by definition, are not private funds.\50\ Many of those
registered investment companies are also commodity pools that trade
commodity interests to a meaningful degree as part of their investment
strategies; as a result, those investment companies' principal
investment advisers have registered with the Commission as CPOs.\51\
Registered investment companies are subject to a comprehensive scheme
of periodic financial reporting under the federal securities laws, and
most of that data is publicly available on the SEC's website through
its EDGAR filing system.\52\ In addition, all CPOs file annual
certified financial statements for their commodity pools with NFA
pursuant to the Commission's regulations.\53\ NFA reviews the
information in commodity pool annual certified financial statements,
uses it as an input for determining the frequency and scope of its
examinations of CPOs in combination with the data that it collects on
its NFA Form PQR, and communicates frequently with Commission staff
regarding its examination of CPOs, as informed by its review of such
financial statements and data filings.
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\48\ Based on the data received for the reporting period of
September 30, 2017, for example, eight out of the ten largest CPOs
filed Form PF in lieu of Form CPO-PQR.
\49\ 15 U.S.C. 80a-1, et seq.
\50\ 15 U.S.C. 80b-2(29).
\51\ 17 CFR 4.5(c); 17 CFR 4.12(c).
\52\ For instance, registered management investment companies--a
category that includes those investment companies that are also
commodity pools--file with the SEC annual reports on Form N-CEN,
quarterly reports of their portfolio holdings on Form N-PORT, and
information about their liquidity on Form N-LIQUID. Management
investment companies that are regulated as money market funds are
subject to different reporting, as are other registered investment
companies that are organized as unit investment trusts, business
development companies, and face-amount certificate companies.
\53\ 17 CFR 4.7(b); 4.22(c) and (d).
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The Commission acknowledges that a determination to no longer
routinely collect the pool-specific data in Schedules B and C would
result in this information not being readily available to FSOC upon
request, which was part of the Commission's envisioned purpose for Form
CPO-PQR when it was first promulgated. As well, the Commission notes
that many dually registered CPOs currently include commodity pools that
are not private funds in data that they report on Form PF, in lieu of a
filing on Form CPO-PQR for such pools, pursuant to Sec. 4.27(d), and
that if the amendments proposed herein are adopted as final, these CPOs
could decide to stop including these pools in their Form PF filing. The
Commission understands that this could result in less information
relevant to commodity pools being available to FSOC from Form PF.
However, given that FSOC is otherwise provided with comparable data for
the sizeable number of dually registered CPOs via Form PF, the
Commission preliminarily believes FSOC's monitoring should not be
materially affected compared to its current state.
B. Revised Form CPO-PQR
With the proposed elimination of the majority of the data fields
set forth in Schedules B and C of current Form CPO-PQR, the resulting
Revised Form CPO-PQR would consist of the information currently
reported in Schedule A of Form CPO-PQR, with a couple deletions
discussed below; the pool schedule of investments, currently reported
under question 6 of Schedule B; and new questions to solicit LEIs for
each CPO and its operated pools. All CPOs would be required to report
all of this information quarterly, regardless of their AUM. As
intimated above, the Commission preliminarily believes that this
information, when integrated with other data streams available to the
Commission, would provide an effective and efficient way for the
Commission to
[[Page 26383]]
oversee and assess the impact of CPOs and their operated pools in the
commodity interest markets.
Current Schedule A provides the Commission basic identifying
information about the CPO and its operated pools and the service
providers they used, including the custodians and brokers used by the
CPO with respect to some or all of the operated pools' assets and the
pools' monthly rate of return. The Commission preliminarily believes
that this basic, demographic information is useful in providing context
with respect to the more granular information it receives regarding the
positions held by commodity pools from other sources.
At the moment, the data currently collected in Form CPO-PQR cannot
be easily aggregated with other market information that the Commission
collects, and, as such, has not been integrated into the Commission's
market oversight function, which limits its utility to the Commission.
Specifically, the lack of LEI information for CPOs and their operated
pools makes it challenging to align it with the data received from
DCOs, DCMs, SDRs, and FCMs to compile a view into the operations of
CPOs and pools and the various roles such entities inhabit within the
commodity interest markets. The Commission is therefore proposing to
amend Form CPO-PQR to include a question seeking the CPO's and the
operated pools' LEIs, to the extent they have them. The inclusion of
existing LEIs within this smaller data set on Revised Form CPO-PQR
should enable the Commission to more efficiently and accurately
synthesize the various Commission data streams on an entity-by-entity
basis. Furthermore, inclusion of LEIs may permit better use of SDR and
other data to illuminate the risk inherent in pools and pool families.
The Commission also anticipates that the inclusion of LEIs would
greatly facilitate the aggregation of data from commodity pools under
different levels of common control.
Although the Commission is proposing to continue to receive the
majority of the information currently collected in Schedule A of Form
CPO-PQR, it is also proposing to eliminate the questions regarding the
pool's auditors and marketers. The Commission and NFA receive
information regarding the independent certified public accountants that
all CPOs are required to engage to prepare certified annual reports,
including audited financial statements, for their operated commodity
pools through other means, which the Commission preliminarily believes
obviates the need for obtaining this information through Revised Form
CPO-PQR.\54\ With respect to a pool's marketers, staff generally
accesses this information through sources other than Form CPO-PQR, such
as registration records for APs associated with the offered pool's CPO
or through the disclosure document for the pool. For example, persons
soliciting for pool participation units are typically either associated
persons of the CPO \55\ or registered representatives of a broker
dealer.\56\ Such persons are subject to regulation by either the
Commission and NFA, or the SEC and the Financial Industry Regulatory
Authority (FINRA). As such, the Commission preliminarily believes that
it readily has the means to learn who such persons are with respect to
the offering of participation units in a particular commodity pool
without requiring that information to be reported on Form CPO-PQR.
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\54\ 17 CFR 1.16.
\55\ 17 CFR 1.3, associated person; 17 CFR 3.12.
\56\ 17 CFR 3.12(h)(ii).
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At present, most CPOs are only required to submit the information
in Schedule A of Form CPO-PQR on an annual basis; only Large CPOs
submit this information quarterly. In order to fully integrate the
information reported on Revised Form CPO-PQR into the Commission's
ongoing oversight of the derivatives markets and commodity pool
industry, the Commission preliminarily believes that the reporting of
this basic information on a more frequent quarterly basis would be
necessary. The Commission therefore preliminarily believes that
requiring reporting of this basic information on a more frequent
quarterly basis would play an important role in facilitating
Commission's ability to monitor trends in the commodity pool industry.
The pool schedule of investments, currently in Schedule B, provides
the Commission a fairly detailed breakdown of how the pool's
investments are allocated by asset category (cash, equities,
alternative investments, fixed income, derivatives, options, and
funds). Although under the current iteration of Form CPO-PQR only Mid-
Sized and Large CPOs are required to submit any information in Schedule
B, and Mid-Sized CPOs only submit it annually, the Commission
preliminarily believes that obtaining a pool schedule of investment
from all CPOs with respect to their operated pools on a regular,
quarterly basis would assist the Commission in understanding the
composition of a pool's portfolio with a limited, if any, increase in
their filing burden, as the Commission notes that NFA Form PQR
currently requires all CPOs regardless of size to file a pool schedule
of investments each quarter.
C. NFA Form PQR
As proposed, Revised Form CPO-PQR would generally align with NFA
Form PQR. NFA Form PQR was implemented in 2010 to elicit data to
implement NFA's risk-based examination program for CPOs.\57\ The form
requests basic identifying information for CPOs and their operated
pools, and a schedule of investments, and requires all CPOs to report
this information quarterly. As a whole, current NFA Form PQR is
essentially identical to current Schedule A of Form CPO-PQR combined
with the pool of investments question from Schedule B. The Commission
also understands that NFA has plans to include questions regarding LEIs
in NFA Form PQR. If Revised Form CPO-PQR is adopted as proposed, and
NFA's amendments to include LEIs are also finalized, the forms will be
substantively identical. Under those circumstances, the Commission
would permit a CPO to file NFA Form PQR in lieu of Revised Form CPO-
PQR, offering CPOs additional filing efficiencies without compromising
the Commission's ability to obtain affected data.
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\57\ NFA Form PQR assists NFA in assessing risks, identifying
trends, and assigning audit priorities in its oversight of CPOs. See
National Futures Association: CPO Quarterly Reporting Requirements--
Proposed Adoption of Compliance Rule 2-46, https://www.nfa.futures.org/news/PDF/CFTC/CR2_46_CPO_Quarterly_Report_082009.pdf (last visited Dec. 30, 2019).
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As a corollary, the Commission is also proposing to revise Sec.
4.27(d), which currently permits dually regulated CPOs required to file
Form PF with respect to one or more of their operated private funds to
file Form PF in lieu of filing current Form CPO-PQR with respect to any
commodity pools that are not private funds.\58\ The Commission believes
that this provision would be redundant in light of the proposed
provision to accept NFA Form PQR and would frustrate an intended
purpose of this proposed rulemaking, which is to allow the Commission
to enhance the Commission's use of its own internal data streams to
effectuate an efficient and effective oversight program of CPOs and
their operated pools, given that Revised Form CPO-PQR would no longer
be closely aligned in content or filing frequency with Form PF. The
Commission is not, however, proposing to change Form PF's status as the
Commission's form, nor is the Commission proposing to change its
requirement that dually registered CPOs
[[Page 26384]]
and CTAs continue to file Form PF with the SEC.
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\58\ 17 CFR 4.27(d).
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Many dually registered CPOs currently include commodity pools that
are not private funds in data that they report on Form PF, in lieu of a
filing on Form CPO-PQR for such pools, in reliance on Sec. 4.27(d). If
Sec. 4.27(d) is revised to eliminate this option for dually registered
CPOs, the Commission understands that some or even all dually
registered CPOs that currently file Form PF in lieu of Schedules B and/
or C of current Form CPO-PQR for their non-private fund pools could
cease to include such non-private fund pools in their Form PF filings,
resulting in a reduced data set collected on Form PF as compared to the
status quo. The Commission preliminarily believes, however, that this
loss of data to the SEC and FSOC would not meaningfully impact the
efficacy and intent of Form PF in furthering the oversight of the
private fund industry, given that it would only result in the loss of
data on Form PF with respect to non-private fund pools.\59\
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\59\ Form CPO-PQR Final Rule, 77 FR at 11281 (``[T]o mitigate
reporting costs to regulated entities that may be registered with
both the Commission and with the SEC, the regulations have been
modified to allow dually registered entities to file on [F]orm PF
(plus the first schedule A of [F]orm CPO-PQR) for all of their
commodity pools, even those that are not `private funds.' ''). As
noted previously, such CPOs relying upon on the Commission's
acceptance of Form PF in lieu of a Form CPO-PQR filing are currently
required to file NFA Form PQR on a quarterly basis under NFA Rule 2-
46.
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IV. Request for Comments
The Commission requests comment on all aspects of this proposal.
Additionally, the Commission would appreciate consideration of the
following specific questions:
A. Scope of Proposed Revised Form CPO-PQR
1. CPOs that are jointly regulated by the Commission and the SEC
are required to file Form PF with respect to private funds; many
commodity pools are private funds within the meaning of Form PF. One of
the Commission's initial rationales for adopting Form CPO-PQR was to
encourage more congruent and consistent regulation of similarly
situated entities among Federal financial regulatory agencies,
particularly with respect to dually registered CPOs required to file
Form PF. If Revised Form CPO-PQR is adopted as proposed, Form PF and
Form CPO-PQR would become less aligned, meaning that dually registered
CPOs would have reporting obligations that are noticeably different
from those CPOs only subject to the Commission's jurisdiction. Would
such a relative lack of regulatory congruence negatively impact CPOs?
Should the Commission instead rescind Form CPO-PQR in its entirety and
require all CPOs to file all or part of Form PF with NFA? Why or why
not?
2. Many dually registered CPOs currently include commodity pools
that are not private funds in data that they report on Form PF, in lieu
of a filing on Form CPO-PQR for such pools, pursuant to Sec. 4.27(d).
If the amendments proposed herein are adopted as final, these CPOs
could decide to stop including these pools in their Form PF filing. For
CPOs in this category, if Form CPO-PQR is amended as proposed, would
you cease reporting data for these pools on Form PF? Why or why not?
3. CPOs that operate commodity pools that are registered investment
companies must report financial information about those pools to the
SEC, while also providing annual pool financial statements to NFA. Is
there any additional reporting of investment company financial
information that the Commission has failed to consider in this proposal
that addresses the concerns underlying Form CPO-PQR?
4. Are there any specific questions that the Commission has
proposed to rescind that it should consider retaining? Why?
5. Are there ways the Commission could further clarify and refine
the reporting instructions for completing Revised CPO-PQR in order to
provide CPOs with greater certainty that they are completing the form
correctly? For example, could the form's references to other
regulations or its defined terms be simplified or made clearer? Please
suggest specific revisions.
B. NFA Form PQR
5. The Commission proposes to permit a timely filing with NFA of
NFA Form PQR in lieu of a filing of the revised Proposed Form CPO-PQR.
Should the Commission consider any other ways to further align with NFA
Form PQR? What would those ways be? Please describe in detail.
6. The schedule of investments as it currently appears in both
Revised Form CPO-PQR and NFA Form PQR requires significant granular
information regarding numerous asset classes. Are there any asset
classes that can or should be eliminated? Why or why not? Should the
Commission consider amending the schedule of investments to align with
the simpler schedule that appeared in NFA Form PQR in 2010?
C. Addition of LEIs
7. In order to further the analysis of Revised Form CPO-PQR across
other existing Commission data sets, the Commission is proposing to
require the inclusion of LEIs in Revised Form CPO-PQR, to the extent
that the CPO or its operated pools otherwise already have LEIs. The
inclusion of LEIs would also make this portion of Form CPO-PQR data
more accessible for analysis consistent with these other data sets.
Should the Commission include LEIs on Revised Form CPO-PQR? Why or why
not?
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires Federal agencies, in
promulgating regulations, to consider whether the rules they propose
will have a significant economic impact on a substantial number of
small entities and, if so, to provide a regulatory flexibility analysis
regarding the economic impact on those entities. Each Federal agency is
required to conduct an initial and final regulatory flexibility
analysis for each rule of general applicability for which the agency
issues a general notice of proposed rulemaking.\60\
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\60\ 5 U.S.C. 601 et seq.
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These regulatory amendments proposed by the Commission would affect
only persons registered or required to be registered as CPOs. The
Commission has previously established certain definitions of ``small
entities'' to be used by the Commission in evaluating the impact of its
rules on such entities in accordance with the requirements of the
RFA.\61\ With respect to CPOs, the Commission previously has determined
that a CPO is a small entity for purposes of the RFA, if it meets the
criteria for an exemption from registration under Sec. 4.13(a)(2).\62\
Because the regulations proposed in this document generally apply to
persons registered or required to be registered as CPOs with the
Commission, as well as from related compliance burdens, the RFA is not
applicable to this Proposal.
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\61\ See, e.g., Policy Statement and Establishment of
Definitions of ``Small Entities'' for Purposes of the Regulatory
Flexibility Act, 47 FR 18618, 18620 (Apr. 30, 1982).
\62\ Id. at 18619-20. Section 4.13(a)(2) exempts a person from
registration as a CPO when: 1) none of the pools operated by that
person has more than 15 participants at any time, and 2) when
excluding certain sources of funding, the total gross capital
contributions the person receives for units of participation in all
of the pools it operates or intends to operate do not, in the
aggregate, exceed $400,000. See 17 CFR 4.13(a)(2).
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Accordingly, the Chairman, on behalf of the Commission, hereby
certifies
[[Page 26385]]
pursuant to 5 U.S.C. 605(b) that these proposed amendments, if adopted,
will not have a significant economic impact on a substantial number of
small entities.
B. Paperwork Reduction Act
1. Overview
The Paperwork Reduction Act (PRA) imposes certain requirements on
Federal agencies in connection with their conducting or sponsoring any
collection of information as defined by the PRA.\63\ Under the PRA, an
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid control number from the Office of Management and Budget (OMB).
This Proposal, if adopted, would result in a collection of information
within the meaning of the PRA, as discussed below. The Commission is
therefore submitting this NPRM to OMB for review.
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\63\ See 44 U.S.C. 3501 et seq.
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The Proposal amends a single collection of information for which
the Commission has previously received a control number from OMB. This
collection of information is, ``Rules Relating to the Operations and
Activities of Commodity Pool Operators and Commodity Trading Advisors
and to Monthly Reporting by Futures Commission Merchants, OMB control
number 3038-0005'' (Collection 3038-0005). Collection 3038-0005
primarily accounts for the burden associated with part 4 of the
Commission's regulations that concern compliance obligations generally
applicable to CPOs and CTAs, as well as certain enumerated exemptions
from registration as such and exclusions from those definitions, and
available relief from compliance with certain regulatory requirements.
As discussed above, the Commission's Proposal includes substantive
changes to current Form CPO-PQR, such as (1) amending Schedule A, which
would constitute the entirety of Proposed Form CPO-PQR, to add LEIs for
each CPO and pool, (2) moving Schedule B's ``Schedule of Investments''
section to Schedule A, and (3) rescinding the remainder of the Form's
current Schedules B and C.\64\ Additionally, the Commission is
proposing to permit the filing of NFA Form PQR with NFA in lieu of
filing Form CPO-PQR by CPOs registered with the Commission. Therefore,
the Commission is also proposing herein to amend Collection 3038-0005,
such that the collection is consistent with the proposed restructuring
of Form CPO-PQR, and reflects the expected adjustment in burden hours
for registered CPOs filing the form, if revised as proposed, including
the ability to file NFA Form PQR in lieu of filing Revised Form CPO-
PQR.
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\64\ See supra pt. III.A.
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This Proposal is not expected to impose any significant new burdens
on CPOs. Rather, because approximately half of registered CPOs are Mid-
Sized or Large CPOs under the current filing regime and will have to
answer fewer questions as compared to the current filing requirements,
and because the Commission anticipates that CPOs currently classified
as Small CPOs will file their NFA Form PQR in lieu of the Revised Form
CPO-PQR, it is reasonable for the Commission to infer that the proposed
amendments will generally prove to be either less burdensome or without
new net burden for all CPOs. The Commission is, however, amending the
burden associated with the collection to reflect the increased
frequency of filing for all CPOs to quarterly and increasing the hours
per filing to reflect the addition of the pool schedule of investments
to the questions in Revised Form CPO-PQR that were derived from current
Schedule A. Although these proposed amendments result in an increase in
the burden hours associated with Revised Form CPO-PQR, the Commission
preliminarily expects that, in practice, CPOs will either experience no
change in their burden or a decrease in burden.
As discussed above, the Commission is proposing herein to accept
the filing of NFA Form PQR in lieu of a filing on Revised Form CPO-PQR.
Because under the proposal any data filed on NFA Form PQR would become
data collected by the Commission, the burden associated with NFA Form
PQR must be included in a collection of information with an OMB control
number. Therefore, the Commission is amending the current burden
associated with OMB Control Number 3038-0005 to also reflect the burden
resulting from NFA Form PQR, which the Commission estimates to be
substantively identical to that derived from Revised Form CPO-PQR.
Despite the fact that the Commission is proposing to accept the
filing of NFA Form PQR in lieu of a filing on Revised Form CPO-PQR, the
Commission preliminarily believes that it is necessary to retain its
own form for data collection purposes to ensure that it retains the
authority to address its data needs regarding CPOs in the future on a
unilateral basis should the need arise. Moreover, given the
Commission's preliminary expectation that it would incorporate the
information collected on Revised Form CPO-PQR more consistently with
its other data streams, the Commission preliminarily believes that
retaining its own form independent of NFA's form avoids any appearance
of the Commission leveraging NFA to avoid complying with the
obligations associated with rulemaking. The Commission also
preliminarily believes that doing so will ensure that members of the
public will be able to exercise their rights to engage in comment as to
the content and structure of the form consistent with the
Administrative Procedures Act going forward.\65\ Therefore, the
Commission has preliminarily concluded that the amendments to Form CPO-
PQR proposed herein are not unnecessarily duplicative to information
otherwise reasonably accessible to the Commission.
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\65\ 5 U.S.C. 500 et. seq.
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2. Revisions to the Collections of Information: OMB Control Number
3038-0005
Collection 3038-0005 is currently in force with its control number
having been provided by OMB, and it was renewed recently on January 30,
2019.\66\ As stated above, Collection 3038-0005 governs responses made
pursuant to part 4 of the Commission's regulations, pertaining to the
operations of CPOs and CTAs, including the required responses of
registered CPOs on Form CPO-PQR pursuant to Sec. 4.27. Generally, the
Commission is proposing adjustments, discussed below, to the
information collection that result in an increase in the burden hours
associated with the collection of information on the Revised Form CPO-
PQR. The Commission preliminarily believes, however, as previously
stated, that CPOs currently categorized as either Mid-Sized or Large
CPOs are expected to experience a reduction in burden relative to the
current filing requirements under Sec. 4.27 and Form CPO-PQR, and
Small CPOs under the current filing requirements are expected to
experience no increase in burden because they are currently required to
file NFA Form PQR, which includes a schedule of investments that is
identical to that under Revised Form CPO-PQR, on a quarterly basis,
and, under this proposal, such CPOs would be permitted to file NFA Form
PQR in lieu of filing Revised CPO-PQR.
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\66\ See Notice of Office of Management and Budget Action, OMB
Control No. 3038-0005, available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201701-3038-005 (last retrieved July 31,
2018).
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[[Page 26386]]
The currently approved total burden associated with Collection
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3038-0005, in the aggregate, is as follows:
Estimated number of respondents: 45,097.
Annual responses for all respondents: 118,824.
Estimated average hours per response: 3.16.\67\
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\67\ The Commission rounded the average hours per response to
the second decimal place for ease of presentation.
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Annual reporting burden: 375,484.
The portion of the aggregate burden that is derived from the
current Form CPO-PQR filing requirements is as follows.
Schedule A (for non-Large CPOs and Large CPOs filing Form PF):
Estimated number of respondents: 1,450.
Annual responses for all respondents: 1,450.
Estimated average hours per response: 6.
Annual reporting burden: 8,700.
Schedule A (for Large CPOs not filing Form PF):
Estimated number of respondents: 250.
Annual responses for all respondents: 1,000.
Estimated average hours per response: 6.
Annual reporting burden: 6,000.
Schedule B (for Mid-Sized CPOs):
Estimated number of respondents: 400.
Annual responses for all respondents: 400.
Estimated average hours per response: 4.
Annual reporting burden: 1,600.
Schedule B (for Large CPOs not filing Form PF):
Estimated number of respondents: 250.
Annual responses for all respondents: 1,000.
Estimated average hours per response: 4.
Annual reporting burden: 4,000.
Schedule C (for Large CPOs not filing Form PF):
Estimated number of respondents: 250.
Annual responses for all respondents: 1,000.
Estimated average hours per response: 18.
Annual reporting burden: 18,000.
The burden associated with NFA Form PQR is as follows:
Estimated number of respondents: 1,700.
Annual responses by each respondent: 6,800.
Estimated average hours per response: 8.
Annual reporting burden: 54,400.
Total annual reporting burden for all CPOs for current Form CPO-PQR
and NFA Form PQR: 86, 900.
The Commission is proposing to no longer estimate burden hours
according to each individual Schedule of Form CPO-PQR, because,
pursuant to the Proposal, Revised Form CPO-PQR will only consist of one
schedule. Therefore, the Commission is proposing to simplify the
collection for Form CPO-PQR compliance to a single burden hours
estimate for each registered CPO completing Revised Form CPO-PQR in its
entirety.\68\ As noted above, the Commission is also proposing to
require that Revised Form CPO-PQR be filed quarterly by each registered
CPO, regardless of the size of their operations, which would result in
four (4) annual responses by each respondent. Further, in the
Commission's experience, the schedule of investments comprised a
considerable portion of the burden hours previously associated with
completing Schedule B, depending on the complexity of a CPO's
operations and the number of pools it operates. Thus, the Commission is
proposing an estimated average hours per response to ensure that burden
continues to be counted. As noted above, although the estimated hours
per response is expected to increase due to the retention of the
schedule of investments and the frequency of response will increase as
well for Small and Mid-Sized CPOs, as well as those Large CPOs filing
Form PF, CPOs should not experience an increase in burden because all
CPOs are already required to provide an identical schedule of
investments as part of their existing NFA Form PQR filing requirement,
which must be submitted on a quarterly basis, and the Commission
preliminarily believes that CPOs will continue to make such filing in
lieu of the Revised Form CPO-PQR.
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\68\ The Commission is also proposing to accept NFA Form PQR in
lieu of Revised Form CPO-PQR filing requirement, which the
Commission has designed purposefully to be very similar. See supra
pt. III.B. The PRA estimates proposed herein assume that all
registered CPOs will either file Revised Form CPO-PQR on a quarterly
basis, or NFA Form PQR, but in no event will a CPO be required to
file both.
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Therefore, the Commission estimates the burden to registered CPOs
for completing Revised Form CPO-PQR, as proposed herein, and NFA Form
PQR, because of the option to file this form in lieu of Revised Form
CPO-PQR, to be as follows:
For Revised Form CPO-PQR and NFA Form PQR for All Registered CPOs:
Estimated number of respondents: 1,700.
Annual responses by each respondent: 6,800.
Estimated average hours per response: 8.
Annual reporting burden: 54,400.
The new total burden associated with Collection 3038-0005, in the
aggregate, reflecting the adjustment in burden associated with Sec.
4.27 and Revised Form CPO-PQR, is as follows:
Estimated number of respondents: 43,062.
Annual responses for all respondents: 113,980.
Estimated average hours per response: 3.25.
Annual reporting burden: 370,467.
3. Request for Comments on Collection
The Commission invites the public and other Federal agencies to
comment on any aspect of the proposed information collection
requirements discussed above. Pursuant to 44 U.S.C. 3506(c)(2)(B), the
Commission solicits comments in order to (i) evaluate whether the
proposed collections of information are necessary for the proper
performance of the functions of the Commission, including whether the
information will have practical utility; (ii) evaluate the accuracy of
the Commission's estimate of the burden of the proposed collections of
information; (iii) determine whether there are ways to enhance the
quality, utility, and clarity of the information proposed to be
collected; and (iv) minimize the burden of the proposed collections of
information on those who are to respond, including through the use of
appropriate automated collection techniques or other forms of
information technology.
Those desiring to submit comments on the proposed information
collection requirements should submit them directly to the Office of
Information and Regulatory Affairs, OMB, by fax at (202) 395-6566, or
by email at [email protected]. Please provide the Commission
with a copy of submitted documents, so that all comments can be
summarized and addressed in the final rule preamble. Refer to the
ADDRESSES section of this NPRM for comment submission instructions to
the Commission. A copy of the supporting statements for the collections
of information discussed above may be obtained by visiting https://www.RegInfo.gov. OMB is required to make a decision concerning the
collections of information between 30 and 60 days after publication of
this document in the Federal Register. Therefore, a comment is best
assured of
[[Page 26387]]
having its full effect if OMB receives it within 30 days of
publication.
C. Cost-Benefit Considerations
Section 15(a) of the CEA requires the Commission to consider the
costs and benefits of its discretionary actions before promulgating a
regulation under the CEA or issuing certain orders.\69\ Section 15(a)
further specifies that the costs and benefits shall be evaluated in
light of five broad areas of market and public concern: (1) Protection
of market participants and the public; (2) efficiency, competitiveness,
and financial integrity of swaps markets; (3) price discovery; (4)
sound risk management practices; and (5) other public interest
considerations. The Commission considers the costs and benefits
resulting from its discretionary determinations with respect to the CEA
section 15(a) considerations.
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\69\ 7 U.S.C. 19(a).
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As discussed above, the Commission is proposing amendments to Form
CPO-PQR that would significantly reduce the amount of reporting
required thereunder. Specifically, the proposal would: (1) Eliminate
the pool-specific reporting requirements in existing Schedules B and C
of Form CPO-PQR, other than the pool schedule of investments (question
6 of Schedule B); (2) amend the information in existing Schedule A of
the form to request LEIs for CPOs and their operated pools and to
eliminate questions regarding the pool's auditors and marketers; (3)
require all CPOs to submit all information retained in Revised Form
CPO-PQR on a quarterly basis; and (4) allow CPOs to file NFA Form PQR
in lieu of filing the Revised Form CPO-PQR, to the extent NFA Form PQR
is amended to include LEIs. In the sections that follow, the Commission
considers the various costs and benefits associated with each of aspect
of the proposal. The baseline against which these costs and benefits
are compared is the regulatory status quo, represented by Form CPO-PQR
as currently codified in appendix A to part 4.
The consideration of costs and benefits below is based on the
understanding that the markets function internationally, with many
transactions involving U.S. firms taking place across international
boundaries; with some Commission registrants being organized outside of
the United States; with some leading industry members typically
conducting operations both within and outside the United States; and
with industry members commonly following substantially similar business
practices wherever located. Where the Commission does not specifically
refer to matters of location, the discussion of costs and benefits
below refers to the effects of this proposal on all activity subject to
the proposed and amended regulations, whether by virtue of the
activity's physical location in the United States or by virtue of the
activity's connection with or effect on U.S. commerce under CEA section
2(i).\70\ Some CPOs are located outside of the United States.
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\70\ 7 U.S.C. 2(i).
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1. Elimination of Pool-Specific Reporting Requirements in Schedules B
and C
The Commission is proposing to eliminate the pool-specific
reporting requirements in existing Schedules B and C of Form CPO-PQR,
other than the pool schedule of investments (question 6 of Schedule B).
The Commission acknowledges that this change, if adopted, could result
in less information available to the Commission and, potentially, to
FSOC. The detailed and specific information requested in Schedules B
and C of Form CPO-PQR is not available to the Commission through any
other of its data streams and, if put to its full use, would allow for
monitoring of CPOs and their operated pools in a way that could help
identify trends and points of stress. A main reason for the
Commission's proposal to eliminate collection of this information stems
from the challenges associated with the data set, including that it is
only reported to the Commission on a quarterly basis, at its most
frequent. Given the limitations associated with the data collected, the
Commission has prioritized its limited resources to pursue other key
regulatory initiatives.
However, considering the alternate data streams currently available
to the Commission, the Commission preliminarily believes that the
Commission could nevertheless effectively exercise its oversight of
CPOs and their operated pools and potentially do so in a more efficient
manner if Revised Form CPO-PQR were adopted as proposed. Furthermore,
the Commission notes that, due in part to the identified data quality
issues, FSOC has never received any Form CPO-PQR data; however, the
Commission acknowledges that FSOC may receive less data as a result of
the proposal, as some CPOs that are filing CFTC-only pool information
through Form PF may stop doing so should this proposal be adopted as
final. The Commission does not, however, believe that FSOC's monitoring
abilities would be materially affected compared to the current status
quo should Schedules B and C largely be eliminated.
The Commission's proposal to eliminate these reporting requirements
would also reduce the ongoing variable compliance costs for Mid-Sized
and Large CPOs, as they would no longer need to devote resources to
compiling and reporting this data. Nor would CPOs be required to
monitor their AUM with the specific purpose of determining their filing
obligations as there would be a single requirement for all CPOs. It is
possible that such cost savings may allow those CPOs to devote
resources to other compliance or operational initiatives, or to
potentially pass them on to pool participants through reduced fees.
These cost savings would be minimized, however, for any CPO that is
dually registered with the SEC and required to file Form PF, which
requires reporting of information substantially similar to that
required in Schedules B and C of current Form CPO-PQR. Additionally,
the proposal would not alleviate any fixed costs affected CPOs may have
already spent in developing systems and procedures designed to meet the
reporting requirements in Schedules B and C, particularly if, again,
such CPOs are also required to file Form PF.
2. Revised Form CPO-PQR
The proposal would amend the information in existing Schedule A of
the form to request LEIs for CPOs and their operated pools. The
addition of this question would allow the Commission to be able to
integrate the data provided in Revised Form CPO-PQR with the
Commission's other more current data streams. Leveraging these other
data sources would enable the Commission to continue its oversight and
monitoring of counterparty risk and liquidity risk for some of the
largest pools within the Commission's jurisdiction, thereby focusing on
areas that are relevant for assessing market and systemic risk, while
eliminating the burden associated with the collection of the more
detailed information in current Schedules B and C, particularly with
respect to pools that may meet the current Large Pool threshold in the
future. The addition of this field should create a one-time cost for
CPOs required to file Revised Form CPO-PQR, as LEIs do not change over
time, potentially allowing fields for those questions to be
prepopulated for subsequent filings.
The proposal would further eliminate questions regarding the pool's
auditors and marketers. This amendment will result in reduced reporting
costs for reporting CPOs while not affecting the
[[Page 26388]]
scope of information available to the Commission, as the Commission
already receives information regarding CPO's accountants and has
alternate means of obtaining information about a pool's marketers. For
example, persons soliciting for pool participation units are typically
either associated persons of the CPO or registered representatives of a
broker dealer. Such persons are subject to regulation by either the
Commission and NFA, or the SEC and FINRA.
Currently, all CPOs other than Large CPOs submit the information in
Schedule A on an annual basis. Increasing the frequency of reporting of
this information will assist the Commission in its efforts to integrate
Revised Form CPO-PQR with the Commission's other more timely data
sources, so as to improve the effectiveness of its ability to monitor
and oversee the activities of CPOs and their operated pools. Although
this would result in an increased regulatory cost for Small and Mid-
Sized CPOs compared to the regulatory status quo, the costs as actually
realized by these CPOs may not be as significant, as they are already
reporting this information on a quarterly basis to NFA via NFA Form
PQR.
Under current Form CPO-PQR, only Mid-Sized and Large CPOs are
required to submit a pool schedule of investments, and Mid-Sized CPOs
only submit that information annually. The proposal would require all
CPOs to submit that information quarterly. The Commission believes that
receiving this information from all CPOs and more frequently would,
when combined with the proposed LEI requirements, further enhance its
ability to integrate the information in Revised CPO-PQR with its other
more current data streams and identify trends on a more timely basis,
with the ultimate goal of supporting its oversight and monitoring of
CPOs and their operated pools for market and systemic risk. As with the
change in reporting frequency for the information in Schedule A, this
change would result in an increased regulatory cost compared to the
regulatory status quo for Small and Mid-Sized CPOs, as Small CPOs would
be required to develop the procedures and systems necessary to take on
the additional reporting obligations for the pool schedule of
investments and both Small and Mid-Sized CPOs would now report that
information on a quarterly basis. However, all CPOs are already
required to report this information on a quarterly basis to NFA via NFA
Form PQR, meaning the actual costs as realized by these CPOs may not be
as significant.
The proposal would allow CPOs to file NFA Form PQR in lieu of
filing the Revised Form CPO-PQR, to the extent NFA Form PQR is amended
to include LEIs, as the Commission understands NFA has planned. Under
NFA's rules, all CPOs regardless of size are currently required to file
NFA Form PQR on a quarterly basis. This provision would therefore
operate to help CPOs maintain their current filing costs without
affecting the scope of information available to the Commission under
Revised Form CPO-PQR.
As mentioned above, the Commission acknowledges that, through the
proposed revision of Sec. 4.27(d), the proposal could result in less
data being collected on Form PF as compared to the current status quo.
Many dually registered CPOs currently include commodity pools that are
not private funds in data that they report on Form PF, in lieu of a
filing on Form CPO-PQR for such pools, in reliance on Sec. 4.27(d). If
Sec. 4.27(d) is revised, these CPOs could decide to stop including
these pools in their Form PF filing. The Commission preliminarily
believes, however, that this loss of data to the SEC and FSOC would not
meaningfully impact the efficacy and intent of Form PF in furthering
the oversight of the private fund industry, given that it would only
result in the loss of data with respect to non-private fund pools;
however, the Commission acknowledges that FSOC may lose data for a
specific type of private fund asset class, managed futures.
3. Alternatives
In lieu of amending Form CPO-PQR as proposed, the Commission could
require all CPOs, regardless of whether they are dually registered, to
file Form PF. The Commission preliminarily believes that this
alternative could operate to increase the reporting burdens for CPOs
that are not dually registered with the SEC without feeding information
directly to the Commission that could be integrated with its other data
sources to develop its internal oversight initiatives over CPOs and
their operated pools.
Alternatively, the Commission could devote resources to rectifying
the challenges with the data reported under current Form CPO-PQR, and
amend the Form to require greater consistency and frequency of
reporting of the data fields proposed to be eliminated in this
proposal. However, the Commission preliminarily believes that its
limited resources could be better directed in line with its regulatory
priorities, and that its objectives with respect to oversight of CPOs
and their operated pools could be effectively and potentially, more
efficiently, achieved through integration with existing data streams.
The Commission preliminarily believes that the proposed changes to
Form CPO-PQR, relative to the alternatives, would permit the Commission
to discharge its regulatory duties with respect to CPOs and their
operated pools that might have the greatest impact on market and
systemic risk while easing reporting obligations on a significant
number of CPOs. The Commission requests comments and data on how
potential alternatives would impact the potential costs and benefits to
market participants and the public. Are there any other alternatives
that may provide preferable costs or benefits than the costs and
benefits related to the Proposal?
4. Section 15(a) Factors
a. Protection of Market Participants and the Public
The Commission preliminarily believes that the proposal would
enhance the ability of the Commission to protect derivatives markets,
its participants, and the public by allowing it to integrate the data
provided in Revised Form CPO-PQR with other existing, more up-to-date,
data streams in a way that would allow the Commission to better
exercise its oversight of CPOs and their operated pools. The Commission
notes that the amendments proposed herein could result in a loss of
data available to FSOC, which could limit FSOC's visibility into the
activities of CPOs and their operated pools.
b. Efficiency, Competitiveness, and Financial Integrity of Markets
The Commission preliminarily believes that the proposal would
assist the Commission in its efforts to support market efficiency,
competitiveness, and financial integrity. Under the proposal, CPOs
would continue to provide useful information about themselves and their
pools to the Commission in a way that it could incorporate with other
data streams to improve its oversight of CPOs, their pools, and how
they operate within and affect the derivatives markets. Additionally,
the Commission preliminarily believes that the specific requirement
that a CPO prepare a pool schedule of investments on a quarterly basis
for each of its operated pools could result in heightened diligence by
the CPO with respect to the pools' ongoing operations and encourage
particularly smaller CPOs to adopt more formalized controls for their
businesses,
[[Page 26389]]
which the Commission preliminarily believes would enhance the
confidence of other market participants in transacting with CPOs and
their operated pools.
c. Price Discovery
The Commission has not identified any impact that the Proposal
would have on price discovery.
d. Sound Risk Management Practices
Although the Commission is proposing that it no longer require CPOs
and their operated pools to report certain risk information, the
Commission recognizes that CPOs will likely continue to benefit from
possessing systems that collect and review risk-related information.
The Commission has not identified any other impact that the Proposal
would have on sound risk management practices.
e. Other Public Interest Considerations
The Commission has not identified any impact on any other public
interest considerations that the Proposal would have, but seeks public
comment on any public interest the Commission should consider in this
rulemaking.
5. Request for Comments
The Commission invites public comment on its cost-benefit
considerations, including the Section 15(a) factors described above.
Commenters are invited to submit with their comment letters any data or
other information that they may have that quantifies the costs and
benefits of the Proposal. In addition, the Commission invites the
public comment on the following questions.
1. Has the Commission misidentified any costs or benefits? If so,
please explain.
2. Please explain whether CPO compliance costs would increase or
decrease as a result of reduced reporting requirements in this
Proposal? Please provide all quantitative and qualitative costs,
including, but not limited to personnel costs and technological costs.
3. Would harmonization of Form CPO-PQR with other similar forms,
such as Form PF, provide a greater savings in compliance costs? If so,
please describe all quantitative and qualitative savings. Please
provide all quantitative and qualitative costs, including, but not
limited to personnel costs and technological costs.
D. Antitrust Laws
Section 15(b) of the CEA requires the Commission to take into
consideration the public interest to be protected by the antitrust laws
and endeavor to take the least anticompetitive means of achieving the
purposes of the CEA, in issuing any order or adopting any Commission
rule or regulation (including any exemption under CEA section 4(c) or
4c(b)), or in requiring or approving any bylaw, rule, or regulation of
a contract market or registered futures association established
pursuant to section 17 of this Act.\71\
---------------------------------------------------------------------------
\71\ 7 U.S.C. 19(b).
---------------------------------------------------------------------------
The Commission preliminarily believes that the public interest to
be protected by the antitrust laws is generally to protect competition.
The Commission requests comment on whether the Proposal implicates any
other specific public interest to be protected by the antitrust laws.
The Commission has considered the Proposal to determine whether it
is anticompetitive and has preliminarily identified no anticompetitive
effects. The Commission requests comment on whether the Proposal is
anticompetitive and, if it is, what the anticompetitive effects are.
Because the Commission has preliminarily determined that the
Proposal is not anticompetitive and has no anticompetitive effects, the
Commission has not identified any less anticompetitive means of
achieving the purposes of the Act. The Commission requests comment on
whether there are less anticompetitive means of achieving the relevant
purposes of the Act that would otherwise be served by adopting the
Proposal.
List of Subjects in 17 CFR Part 4
Advertising, Brokers, Commodity futures, Commodity pool operators,
Commodity trading advisors, Consumer protection, Reporting and
recordkeeping requirements.
For the reasons stated in the preamble, the Commodity Futures
Trading Commission proposes to amend 17 CFR part 4 as set forth below:
PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS
0
1. The authority citation for part 4 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 6(c), 6b, 6c, 6l, 6m, 6n, 6o, 12a,
and 23.
0
2. Amend Sec. 4.27 by revising paragraphs (c)(1) and (d) to read as
follows:
Sec. 4.27 Additional reporting by commodity pool operators and
commodity trading advisors.
* * * * *
(c) * * *
(1) Each reporting person shall file with the National Futures
Association, a report with respect to the directed assets of each pool
under the advisement of the commodity pool operator consistent with
appendix A to this part or commodity trading advisor consistent with
appendix C to this part; Provided that, a commodity pool operator
required to file NFA Form PQR with the National Futures Association for
the reporting period may make such filing in lieu of the report
required under this section consistent with appendix A to this part.
* * * * *
(d) Investment advisers to private funds. CPOs and CTAs that are
dually registered with the Securities and Exchange Commission, and that
are required to file Form PF under the rules promulgated under the
Investment Advisers Act of 1940, shall file Form PF with the Securities
and Exchange Commission. Dually registered CPOs and CTAs that file Form
PF with the Securities and Exchange Commission will be deemed to have
filed Form PF with the Commission for purposes of any enforcement
action regarding any false or misleading statement of a material fact
in Form PF.
* * * * *
0
3. Revise appendix A to part 4 to read as follows:
Appendix A to Part 4--Form CPO-PQR
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BILLING CODE 6351-01-C
Issued in Washington, DC, on April 16, 2020, by the Commission.
Robert Sidman,
Deputy Secretary of the Commission.
Note: The following appendices will not appear in the Code of
Federal Regulations.
Appendices to Amendments to Compliance Requirements for Commodity Pool
Operators on Form CPO-PQR--Commission Voting Summary and Commissioners'
Statements
Appendix 1--Commission Voting Summary
On this matter, Chairman Tarbert and Commissioners Quintenz,
Behnam, Stump, and Berkovitz voted in the affirmative. No
Commissioner voted in the negative.
Appendix 2--Supporting Statement of Chairman Heath P. Tarbert
The esteemed 19th century mathematician Charles Babbage asked
``if you put into the machine the wrong figures, will the right
answers come out?'' \1\ Baggage foresaw what would evolve in the
20th century as the ``garbage-in, garbage-out'' predicament--a
potential pitfall now only magnified in the 21st century by the
combination of computing technology and vast amounts of data. Since
becoming Chairman, I have prioritized improving the CFTC's approach
to collecting data. As a federal agency, we must be selective about
the data we collect, and then make sure we are actually making good
use of the data for its intended purpose.
---------------------------------------------------------------------------
\1\ Charles Baggage, Passages from the Life of a Philosopher
(London 1864).
---------------------------------------------------------------------------
This issue has arisen in a number of contexts here at the CFTC.
For example, we recently proposed amendments to our swap data
reporting rules, which cover both regulatory reporting and the
disclosure of certain swap transaction data to the public at
large.\2\ The purpose of those amendments is to simplify the swap
data reporting process to ensure that market participants are not
burdened with unclear or duplicative reporting obligations that do
little to reduce market risk or facilitate price discovery. If those
amendments are adopted, the CFTC will no longer collect data that
does not advance our oversight of the swaps markets.\3\ And we will
start collecting additional data that does.
---------------------------------------------------------------------------
\2\ See Proposed Rule: Amendments to the Real-Time Public
Reporting Requirements (Part 43) (Feb. 20, 2020) (publication in the
Federal Register forthcoming); and Proposed Rule: Amendments to the
Swap Data Recordkeeping and Reporting Requirements (Part 45) (Feb.
20, 2020) (publication in the Federal Register forthcoming).
\3\ See Heath P. Tarbert, Chairman, CFTC, Statement in Support
of Proposed Rules on Swap Data Reporting (Feb. 20, 2020), available
https://www.cftc.gov/PressRoom/SpeechesTestimony/tabertstatement022020.
---------------------------------------------------------------------------
Today we are engaged in a similar exercise. We are considering
amendments to the compliance requirements for commodity pool
operators (``CPOs'') on Form CPO-PQR. These amendments reflect the
CFTC's reassessment of the scope of Form CPO-PQR and how it aligns
with our current regulatory priorities. By refining our approach to
data collection, today's amendments--in conjunction with our current
market surveillance efforts--would enhance the CFTC's ability to
gain more timely insight into the activities of CPOs and their
operated pools. At the same time, the amendments would reduce
reporting burdens for market participants.
Background on Form CPO-PQR
Form CPO-PQR requests information regarding the operations of a
CPO, and each pool that it operates, in varying degrees of frequency
and complexity, depending upon the assets under management (``AUM'')
of both the CPO and the operated pool(s). When adopting Form CPO-PQR
in 2012, the Commission determined that form data would be used for
several broad purposes, including:
Increasing the CFTC's understanding of our registrant
population;
assessing the market risk associated with pooled
investment vehicles under our jurisdiction; and
monitoring for systemic risk.\4\
---------------------------------------------------------------------------
\4\ See Commodity Pool Operators and Commodity Trading Advisors:
Compliance Obligations, 77 FR 11252 (Feb. 24, 2012).
---------------------------------------------------------------------------
For the majority of more pool-specific questions on Form CPO-
PQR, the Commission believed the incoming data would assist the CFTC
in monitoring commodity pools to identify trends over time. For
example, the CFTC would get information regarding a pool's exposure
to asset classes, the composition and liquidity of a pool's
portfolio, and a pool's susceptibility to failure in times of
stress.\5\
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\5\ See Commodity Pool Operators and Commodity Trading Advisors:
Amendments to Compliance Obligations, 76 FR 7976, 7981 (Form CPO-PQR
Proposal) (Feb. 11, 2011).
---------------------------------------------------------------------------
Shortcomings of Form CPO-PQR
Seven years of experience with Form CPO-PQR, however, have not
born out that vision. To begin with, in an effort to take into
account the different ways CPOs maintain information, the Commission
has allowed CPOs flexibility in how they calculate and present
certain of the data elements. As a result, it has been challenging,
to say the least, for the CFTC to identify trends across CPOs or
pools using Form CPO-PQR data. In addition, taking into account the
volume and complexity of the data it was requesting, the Commission
decided not to require the data to be provided in real-time, but
instead mandated only post hoc quarterly or annual filings.
As the CFTC staff has reviewed the data over the years, it has
become apparent that the disparate, infrequent, and delayed nature
of CPO reporting has made it difficult to assess the impact of CPOs
and their operated pools on markets. This is largely because
conditions and relative CPO risk profiles may have changed,
potentially significantly, by the time Form CPO-PQR is filed with
the CFTC. This was not entirely unforeseen. When Form CPO-PQR was
adopted, some criticized the rulemaking, raising concerns about
whether the information gathered would enable the CFTC to monitor
commodity pools for systemic risk effectively.\6\ They likewise
questioned
[[Page 26411]]
whether the CFTC even had the resources to do so and in fact would
do so.\7\
---------------------------------------------------------------------------
\6\ See, e.g., Jill E. Sommers, Commissioner, CFTC, Dissenting
Statement, Commodity Pool Operators and Commodity Trading Advisors:
Amendments to Compliance Obligations (Feb. 9, 2012), available
https://www.cftc.gov/PressRoom/SpeechesTestimony/sommersstatement020912a.
\7\ Id.
---------------------------------------------------------------------------
Sound Regulation Means Collecting Information We Intend To Use
What we need is not over-regulation or even de-regulation, but
rather sound regulation.\8\ In the midst of the coronavirus
pandemic, when we are facing the greatest economic challenge since
the 2008 financial crisis, and possibly since the Great Depression,
the fact that we are asking market participants to put all this time
and effort into providing us data that is difficult to integrate
with the CFTC's other more timely and standardized data streams is
not sound regulation. Frankly, it is wasteful and an example of bad
government.
---------------------------------------------------------------------------
\8\ See CFTC Vision Statement, available https://www.cftc.gov/About/Mission/index.htm.
---------------------------------------------------------------------------
My colleague Commissioner Dan Berkovitz recently made the
following observation: ``In addition to obtaining accurate data, the
Commission must also develop the tools and resources to analyze that
data.'' \9\ He is spot on. I believe the converse is also true. We
should not collect data we cannot use effectively. In the case of
Form CPO-PQR, this means not requiring market participants to
provide information that the CFTC has neither the resources nor the
ability to analyze with our other data streams. Our credibility as a
regulator is strengthened when we honestly admit that our
regulations ask for data that we both have not used effectively and
have no intention of using going forward. That is what we are doing
today.
---------------------------------------------------------------------------
\9\ Dan M. Berkovitz, Commissioner, CFTC, Statement on Proposed
Amendments to Parts 45, 46, and 49: Swap Data Reporting Requirements
(Feb. 20, 2020), available https://www.cftc.gov/PressRoom/SpeechesTestimony/berkovitzstatement022020b.
---------------------------------------------------------------------------
Alternative Sources of Data Are Available to the Commission
Although we would be eliminating some components of Form CPO-
PQR--those required data that the CFTC has not used in meeting its
mission--Form CPO-PQR is not our only source of data regarding
commodity pools. The CFTC has devoted substantial resources to
developing other data streams and regulatory initiatives designed to
enhance our ability to surveil financial markets for risk posed by
all manner of market participants, including CPOs and their operated
pools. These data streams include extensive information related to
trading, reporting, and clearing of swaps. Importantly, most of the
transaction and position information the CFTC uses for our
surveillance activities is available on a more timely and frequent
basis than the data received on the current iteration of Form CPO-
PQR. Furthermore, CFTC programs to conduct surveillance of
exchanges, clearinghouses, and futures commission merchants already
include CPOs and do not rely on the information contained in
Schedules B and C of Form CPO-PQR.
Taken together, the CFTC's other existing data efforts have
enhanced our ability to surveil financial markets, including with
respect to the activities of CPOs and the pools they operate. In
general, the CFTC's alternate data streams provide a more timely,
standardized, and reliable view into relevant market activity than
that provided under Form CPO-PQR. The proposal contemplates a
revised Form CPO-PQR that would be more easily integrated with these
existing and more developed data streams. This would enable the CFTC
to oversee and assess the impact of CPOs and their operated pools in
a way that is both more effective for us and less burdensome for
those we regulate.
Legal Entity Identifiers Are Something We Need
Our proposal does more than simply eliminate certain data
collections. It would also require the collection of an additional
piece of key information: Legal entity identifiers (``LEIs'') for
CPOs and their operated pools. LEIs are critical to understanding
the activities and interconnectedness within financial markets.
Although LEIs have been around since 2012 and authorities in over 40
jurisdictions have mandated the use of LEI codes to identify legal
entities involved in a financial transaction,\10\ this would be a
new requirement for Form CPO-PQR. The lack of LEI information for
CPOs and their operated pools has made it challenging to align the
data collected on Form CPO-PQR with the data received from
exchanges, clearinghouses, swap data repositories, and futures
commission merchants. As a result, we cannot always get a full
picture of what is happening in the markets we regulate.
---------------------------------------------------------------------------
\10\ See Financial Stability Board, Thematic Review on
Implementation of the Legal Entity Identifier, Peer Review Report
(May 28, 2019), available https://www.fsb.org/wp-content/uploads/P280519-2.pdf.
---------------------------------------------------------------------------
The Commission is therefore proposing to amend Form CPO-PQR to
include a question seeking the LEIs of both CPOs and the operated
pools. The inclusion of LEIs within this smaller data set on the
amended Form CPO-PQR should enable the CFTC to synthesize the
various data streams on an entity-by-entity basis more efficiently
and accurately. Inclusion of LEIs may also permit better use of swap
data repository and other data to illuminate any risks inherent in
pools and pool families.
In addition, the proposal would better align Form CPO-PQR with
Form PQR of the NFA, which all CPOs must file quarterly and which
the NFA may revise to include questions regarding LEIs. Under these
circumstances, we could permit a CPO to file NFA Form PQR in lieu of
our Form CPO-PQR as revised. In doing so, we would offer CPOs
greater filing efficiencies without compromising our ability to
obtain relevant data.
Data Sharing With the OFR Could Be Improved
The Dodd-Frank Act established the Office of Financial Research
(``OFR'') nearly a decade ago to look across our financial system
for risks and potential vulnerabilities.\11\ It was contemplated
that the OFR would have access to data from other U.S. financial
regulators. Yet to date, the CFTC has shared none of the Form CPO-
PQR data with the OFR, largely because of the shortcomings outlined
above.
---------------------------------------------------------------------------
\11\ See Sections 151-56 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376
(2010), available https://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf.
---------------------------------------------------------------------------
Another benefit of today's proposal is that we intend to share
with the OFR the information collected on Form CPO-PQR once it is
revised. To this end, we are presently in the process of negotiating
a memorandum of understanding with the OFR, which will allow us for
the first time to provide the information we collect regarding CPOs.
Conclusion
For these reasons, I am pleased to support the Commission's
proposal to amend the compliance requirements for CPOs on Form CPO-
PQR. Form CPO-PQR as revised would focus on the collection of data
elements that can be used with other CFTC data streams and
regulatory initiatives to facilitate oversight of CPOs and their
pools. The proposal would reduce data collection requirements for
market participants, while mandating disclosure of LEIs by CPOs and
their operated pools. Focusing on enhancing data collection by the
agency is no doubt tedious. Nonetheless, I am convinced it leads to
smarter regulation that helps promote the integrity, resilience, and
vibrancy of U.S. derivatives markets.
Appendix 3--Supporting Statement of Commissioner Brian Quintenz
I support today's proposal that would simplify and streamline
the reporting obligations of commodity pool operators (CPOs) on Form
CPO-PQR. The proposal would eliminate much of existing Schedules B
and C, which together contain roughly 72 distinct questions, if one
includes all the separately identifiable subparts. Many of these
questions are challenging for CPOs to calculate precisely and
require numerous underlying assumptions that vary from firm to firm,
making it difficult, if not impossible, for the Commission to
perform an apples-to-apples comparison across the commodity pool
industry.
Moreover, in my opinion, many of these questions are more
academic than pragmatic in nature--information that may be nice for
the Commission to have, but data that is certainly not necessary for
the Commission to effectively oversee commodity pools and the
derivatives markets. For example, under the proposal, the Commission
would no longer request information about the geographical breakdown
of a pool's investments or the aggregate value of a pool's
derivatives positions--the latter of which provides almost no
insight into a pool's actual risk because it does not take into
account collateral. I would also note that large pools file the Form
CPO-PQR within 60 days of the end of a calendar quarter. This means
that by the time Commission staff receives the
[[Page 26412]]
information on the form, it is already stale and out-of-date, which
seriously diminishes its utility for purposes of real-time
monitoring of risk or market activity.
Importantly, the proposal retains questions regarding a pool's
schedule of investments, which contains information that is critical
for the National Futures Association's and the Commission's
supervision and examination programs for CPOs. The proposed
revisions to Form CPO-PQR would also align the Commission's form
with the NFA's Form PQR, which will simplify the filing process for
CPOs and ensure the Commission has the same visibility as the NFA
into the operations of CPOs. I am also pleased the proposal would
require CPOs and their operated pools to include their legal entity
identifiers (LEIs), to the extent they have LEIs due to their swap
trading activity. The inclusion of LEIs will enable the Commission
to aggregate the information reported on the Form CPO-PQR with the
swap data information reported to the Commission under Part 45. Over
time, I hope this will provide the Commission with a greater
understanding of how a CPO's swap activities complement its other
investment activities.
The proposal also requests comment on whether there are ways the
Commission could clarify or refine its instructions for completing
the Form CPO-PQR. I encourage market participants to take a close
look at the form's instructions and related frequently asked
questions documents to determine if the filling process can be
simplified.
In closing, I would like to thank the Division of Swap Dealer
and Intermediary Oversight for its hard work in advancing this
important proposal.
Appendix 4--Concurring Statement of Commissioner Rostin Behnam
I respectfully concur with the Commodity Futures Trading
Commission's (the ``Commission'' or ``CFTC'') issuance of a proposed
rule (the ``Proposal'') to amend Regulation 4.27 and Form CPO-PQR.
In devising the Proposal, Commission staff judiciously evaluated
several years of returns on the Commission's collection of detailed
data from commodity pool operators (CPOs)--data anticipated to
provide valuable insights to both the Commission and the Financial
Stability Oversight Counsel (FSOC) as we collectively moved into a
new era of Wall Street reform on the heels of the 2008 financial
crisis. In my view, the general conclusion that the Proposal
elucidates: the information collected in the current Form CPO-PQR as
well as its frequency of collection is simply not fit for purpose.
The determination to bring seven years of data collection aimed
at supporting the goals of the Dodd-Frank Act \1\ to an abrupt end
may, in this particular instance, be an appropriate revision. The
Proposal intends to markedly reduce the Commission's collection of
granular, pool-specific data from a significant population of CPOs.
However, the evidence suggests that the challenges of working with
such data have undercut its potential value. Therefore, any data
loss should not undermine the Commission's oversight or FSOC's
current monitoring efforts. At this point in time, the Commission
should take the opportunity to make strategic, programmatic and
disciplined changes.
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\1\ The Dodd-Frank Wall Street Reform and Consumer Protection
Act, Public Law 111-203, 124 Stat. 1376 (2010) (the ``Dodd-Frank
Act'').
---------------------------------------------------------------------------
In terms of the data and the transactions the Commission thought
possible within our Form CPO-PQR database, results have been mixed.
The Proposal aims to make targeted corrections, without forgoing the
possibility of future adjustments should the Commission later
determine that additional data collection would support regulatory
initiatives or would be responsive to FSOC requirements to fulfill
statutorily mandated duties and initiatives aimed at identifying and
monitoring risks to financial stability.\2\
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\2\ See Proposal at I. Not only is the Commission among those
agencies that could be asked to provide information necessary for
the FSOC to perform its statutorily mandated duties, but the FSOC
may issue recommendations to the Commission regarding more stringent
regulation of financial activities that FSOC determines may create
or increase systemic risk. See Dodd-Frank Act Sec. Sec. 112(d)(1),
120; See also Reporting by Investment Advisers to Private Funds and
Certain Commodity Pool Operators and Commodity Trading Advisors on
Form PF, 76 FR 71128, 71129 (Nov. 16, 2011); Commodity Pool
Operators and Commodity Trading Advisors: Compliance Obligations, 77
FR 11252, 11253 (Feb. 24, 2012).
---------------------------------------------------------------------------
The 2008 financial crisis exposed numerous weaknesses in the
U.S. financial regulatory framework. Unfortunately, many were at the
expense of main street Americans. The legislative response was swift
and effective in reforming our nation's financial regulatory regime.
One of the more pressing needs that the Dodd-Frank Act addressed
relates to data collection and analysis as a tool to monitor,
surveil and detect financial market risk. All with the intention of
anticipating and catching stability and resiliency concerns before
it is too late. As all U.S. regulators continue to adapt to the new
framework--even a decade later--adopting reforms quickly in some
cases, and more gradually in others, we all collectively continue to
learn and develop better practices at data collection and analysis.
Although not perfect, our regulatory purpose and mission is clear,
and the importance of efficient and effective data to fulfilling our
statutory mandate cannot be understated. As we all are experiencing
the evolution of the nation's tech economy, it is hard to ignore the
engine of its success: Data. This is the world we live in, and
policymakers and regulators alike must keep pace while exercising
appropriate discipline in collecting, handling, and managing data.
This Proposal focuses on the Commission's data needs in support
of CPO and commodity pool oversight. The Proposal seeks to account
for: (1) Other data streams, regulatory initiatives, and risk
surveillance programs that support the Commission's monitoring of
CPO and commodity pool activities as enhanced by improvements to the
Commission's data integration and analysis capabilities; (2) the
Commission's statutory obligations to make data available to the
FSOC and the impact of the proposed amendments on FSOC's monitoring
abilities; (3) the duties of CPOs that are dually registered with
the Securities and Exchange Commission (SEC) as private fund
advisors and are required to file Form PF as well as the scope of
current Form PF; (4) the data elicited by the National Futures
Association's (NFA's) Form PQR, a form comparable to Form CPO-PQR
filed by all CFTC-registered CPOs, regardless of size, used to
support NFA's risk-based examination program for CPOs; and (5)
reduced reporting burdens and increased filing efficiencies for
affected CPOs. I appreciate the Commission's and its staff's ongoing
engagement with the SEC and FSOC, as well as with NFA, throughout
the drafting of this Proposal and am encouraged that discussions are
ongoing. I also appreciate staff's consideration and inclusion of
several of my suggested edits to this Proposal.
I support issuance of the Proposal; however, I am concerned that
in proposing to amend Regulation 4.27(d) to no longer accept Form PF
filing in lieu of the proposed revised Form CPO-PQR, less data may
be collected on Form PF from dually regulated CPOs.\3\ Should the
Proposal be finalized in its current form, FSOC may receive less
data from certain CPOs who have been reporting information on
commodity pools that are not private funds in the data they report
on Form PF in lieu of filing Form CPO-PQR for such pools, as
currently permitted under Regulation 4.27(d). To the extent the
Proposal may have the side-effect of undermining ongoing FSOC
surveillance and monitoring efforts by eliminating the incentivized
reporting of CFTC-pool only information on Form PF, I urge members
of the public to respond to related requests for comment embedded in
the Proposal.\4\ Notwithstanding my concerns, I am pleased that, to
the extent the interests of the SEC and FSOC may be impacted, each
has had and continues to have ample opportunity to weigh-in.
Moreover, should the FSOC determine that it requires additional data
from dually regulated CPOs or CPOs generally; it has authority to
request such data submissions directly from the Commission or,
alternatively, consult with the SEC--and more indirectly, with the
CFTC--regarding the form and content of Form PF.\5\
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\3\ See Proposal at III.C.
\4\ See Proposal at IV.
\5\ See note 2.
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I would like to close by again thanking staff for all of their
hard work on this important Proposal, specifically in these
difficult and unique times, and look forward to considering comments
from the public. To that end, if needed, I encourage market
participants to request an extension of the comment period. As we
all continue to endure the challenges of new realities at home and
in the workplace as a result of the Covid-19 pandemic, I firmly
believe the Commission needs to be as flexible as necessary to
accommodate market participants and the general public in their
efforts to provide us with the best comments to rulemakings. I have
made my position clear on what and how the Commission
[[Page 26413]]
should be allocating its resources during these unprecedented times.
Appendix 6--Statement of Commissioner Dan M. Berkovitz
I am voting in favor of this proposed rule to amend Regulation
4.27 and Form CPO-PQR (``Proposal''). The information in Form CPO-
PQR that no longer would be required under the Proposal has not
proven to be useful to the Commission in identifying or measuring
systemic or idiosyncratic risk.
In the wake of the financial crisis and the enactment of the
Dodd-Frank Act, the Commission required certain commodity pool
operators (``CPOs'') to report on Form CPO-PQR a variety of data
that, at the time, the Commission believed would enable it to assess
risks presented by pooled commodity investment vehicles, such as a
pool's exposure to certain asset classes and susceptibility to
market stress.\1\ As the Proposal explains, however, the
Commission's experience over the past seven years has unfortunately
demonstrated that some of the information on Schedules B and C of
Form CPO-PQR has not been useful for these purposes. The Proposal
would amend the Form CPO-PQR requirements to eliminate the
information that has not proven to be of value to the Commission,
yet retain the requirements to report useful information, such as
the pool schedule of investments.\2\
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\1\ See Final Rule, Commodity Pool Operators and Commodity
Trading Advisors: Amendments to Compliance Obligations, 77 FR 11252,
11252 (Feb. 24, 2012).
\2\ ``The eliminated data elements include detailed, pool-
specific information, provided on both the individual and aggregate
level, such as questions about investment strategy and counterparty
credit exposure, asset liquidity and concentration of positions,
clearing relationships, risk metrics, financing, and investor
composition.'' Proposal, Amendments to Compliance Requirements for
Commodity Pool Operators on Form CPO-PQR, at Sect. III.A.
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At the same time as the Commission streamlines its data
collection requirements, it must also make better use of the data
that it does collect. The Commission gathers a diverse and large
array of data on a daily basis for over-the-counter and exchange-
traded derivatives transactions.\3\ As the Proposal notes, these
data sets have the potential to be more useful for risk monitoring
and surveillance purposes than certain static information collected
quarterly through Form CPO-PQR. But the Commission still has a long
way to go before it can use such data to perform a comprehensive,
forward-looking analysis of our markets. The Commission should
improve its strategies and capabilities for aggregating and
analyzing the information it will continue to receive.
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\3\ See generally id. at Sect. III.
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The Proposal would take one step in this direction by requiring
CPOs using the swap markets to report legal entity identifiers
(``LEIs''). Collecting LEIs is important because they allow the
Commission to aggregate SDR data from related pools, thereby
furthering our understanding of the role these pools play in our
markets. However, the Proposal does not require all firms, such as
those that do not trade swaps, to obtain and report LEIs, so this
amendment will not allow the Commission to aggregate all derivatives
transactions by pools under common control. The Commission can and
should do more to integrate and analyze all of the data at its
disposal.
Finally, I am pleased that the comment period for this Proposal
is 60 days. Providing the public with sufficient time to prepare
meaningful comments to our rules in these extraordinary times is
good public policy.
I encourage the public to comment on this Proposal. In
particular, the Proposal acknowledges that by removing from Form
CPO-PQR some of the pool-specific data in Schedules B and C, less
information would be available to the Financial Stability Oversight
Counsel (``FSOC''). The Proposal also notes, however, that FSOC
otherwise receives comparable data for the large portion of dually
registered CPOs via Form PF. I am interested in commenters' views on
whether this amendment would affect FSOC's ability to monitor for
systemic risk.
I would like to thank the staff, particularly the Division of
Swap Dealer and Intermediary Oversight, for their engagement with my
office on this Proposal. I look forward to the Commission
articulating further steps to enhance its surveillance of commodity
pools, and our markets more broadly.
[FR Doc. 2020-08496 Filed 5-1-20; 8:45 am]
BILLING CODE 6351-01-P
