CFTC CPO, CTA Exemption Relief Rule


On Oct. 2, CFTC proposed to amend CPO, CTA compliance exemptions.


  • CFTC proposed to amend Regulation 4.7 (17 CFR 4.7) on CPO compliance exemptions.
  • Aims to update various aspects of Reg 4.7 to modernize rule and reflect current use.
  • Commissioner Pham and Johnson issued statements in support of proposed revisions.
  • Mersinger dissented, unable to support proposal to narrow the scope of exemptions.
  • Background
  • Number of CPOs and CTAs operating pursuant to Reg. 4.7 and offering their pools and trading programs to Qualified eligible persons (QEPs) is a popular registration status.
  • Commission observed that the number of CPOs and CTAs relying upon Regulation 4.7 significantly outnumbers the number of CPOs and CTAs fully registered with the CFTC.
  • Rule Provisions
  • Increased portfolio requirement monetary thresholds to account for effects of inflation.
  • New disclosure requirements for CPOs and CTAs operating pools and trading programs.
  • Codified routinely issued exemptive letter relief that allows CPOs of funds of funds operated to choose to distribute monthly statements within 45 days of month-end.
  • Consultation
  • Comments must be submitted within 60 days of publication in the federal register.
  • Oct. 12, 2023 Fed Reg Proposal
  • On Oct. 12, 2023, CFTC published the proposed amendments in the federal register.
  • The deadline for the receipt of comments on the proposal was set as Dec. 11, 2023.
  • Dec. 2023 SIFMA Comment Letter
  • On Dec. 11, 2023, SIFMA issued comment letter on proposed Reg 4.7 amendments.
  • Opposed prescriptive disclosure mandate as unsupported by cost-benefit analysis.
  • Encouraged CFTC to decline to adopt proposal to require retail type disclosures to be provided to sophisticated prospective investors in Rule 4.7 operated pools, accounts.
  • If proposal is adopted, CFTC should allow for at least an 18-month compliance period.
  • To allow CPOs and CTAs adequate time to develop the necessary compliance programs.
  • Sep. 12, 2024 CFTC Final Rule
  • On Sep. 12, 2024, CFTC approved final rule on exemptions from certain compliance requirements for CPOs and CTAs regarding offerings to qualified eligible persons (QEP).
  • Commissioners Mersinger and Pham issued statements of support for the final rule.
  • The final rule will be effective 60 days after publication in the federal register.
  • CPOs and CTAs must comply with the increased Portfolio Requirement thresholds in Regulation 4.7(a) by six months after the rule's publication in the federal register.
  • Sep. 26, 2024 CFTC Fed Reg Final Rule
  • On Sep. 26, 2024, CFTC published final rule in federal register, effective Nov. 25, 2024
  • CPOs, CTAs must comply with increased portfolio requirement threshold Mar. 26, 2025.
  • Optional monthly account statement reporting schedule for certain § 4.7 pools is available to CPOs as of effective date, compliance required upon election of schedule.

Regulators CFTC; SIFMA
Entity Types CPO; CTA
Reference CFTC: 89 FR 78793, 9/26/2024; PR, Gd, RF, 9/12/2024; 88 FR 70852, 10/12/2023; RF, Sp, Info, PR 8802-23, 10/2/2023; SIFMA: PR, Lt, 12/11/2023; Reg 4.7; RIN 3038-AF25; Citation: 17 CFR 4.7;
Functions Compliance; Financial; Legal; Operations; Product Administration; Registration/Licensing; Reporting; Risk
Countries United States of America
Category
State
Products Clearing; Commodities; Derivatives; Futures
Regions Am
Rule Type Final
Rule Date 10/2/2023
Effective Date 11/25/2024
Rule Id 186890
Linked to N/A
Reg. Last Update 9/26/2024
Report Section US Investment

Last substantive update on 09/30/2024