) is an individual or organization that solicits or receives funds to use in the operation of acommodity pool, syndicate, investment trust, or other similar fund, specifically for trading in commodity interests. Such interests includecommodity futuresswapsoptionsand/orleveragetransactions.A commodity pool may refer to funds that trade in commodities and can includehedge funds. A CPO may make trading decisions for a fund or the fund can be managed by one or more independentcommodity trading advisors.The definition of CPO may apply to investment advisors forhedge fundsand private funds includingmutual fundsandexchange-traded fundsin certain cases.CPOs are generally regulated by the United States federal government through theCommodity Futures Trading CommissionandNational Futures Association.
In the United States, trading of futures contracts for agricultural commodities dates back to at least the 1850s.4In the 1920s, the federal government proposed the first regulation aimed at futures trading and, in 1922, theGrain Futures Actwas passed. Following amendments in 1936, this law was replaced by theCommodity Exchange Act.54However, it was not until 1974, when theCommodity Futures Trading Commission(CFTC) was established under theCommodity Futures Trading Commission Act, that the commodity pool operator was recognized in legislation.6At that time the majority of trading was in futures contracts for agricultural commodities, but, as noted by the CFTC, in later years the futures industry has become increasingly varied and complex.5
In July 2010, the definition of commodity pool operator under theCommodity Exchange Actwas expanded by theDodd-Frank Wall Street Reform and Consumer Protection Actto include persons operating collective investment vehicles that trade swaps. Prior to this, swaps were not included in the CPO definition.78
Prior to 1974, commodity pool operators were unregulated except for limited requirements to maintain records. In 1979, the CFTC adopted the first comprehensive regulation for commodity pool operators, which was later strengthened by additional rules in 1982 and 1983, increasing the CFTCs oversight of such entities.69Also in 1983, the CFTC authorized theNational Futures Association(NFA) to carry out processing of registration for entities including CPOs.10
Under theCommodity Exchange Act, CPOs must register with and conform to the regulations of the CFTC, unless they meet the Commissions criteria for exemption.111Additionally, registered CPOs are required to become members of the NFA, which regulates organizations or individuals who conduct futures trading business with public customers.12All registered CPOs must follow the CFTCs disclosure requirements and provide the commission with records and reports.1
Under the CFTCs Rule 4.7, a CPO may be exempt from certain disclosure and reporting requirements if investment in the fund it operates is only open to qualified eligible persons, including registered commodities and securities professionals andaccredited investors.1If not all of a CPOs investors are qualified eligible persons, it may still be exempt from the full disclosure requirements of the CFTC if it engages primarily insecurities transactions.1Further exemptions from registration include those under CFTC Regulation 4.13, which states that operators of smaller commodity pools and pools trading at ade minimislevel of commodity interests may be exempted, and CFTC Regulation 4.5, under which certain operators can claim an exclusion from the definition commodity pool operator.13If a CPO is exempt from registration, they may still have to follow certain limited requirements for disclosure and reporting, including providing investors with a funds offering memorandum, quarterly account statements, and an abbreviated form of its annual report. In addition, the CPO is required to submit a self-executing notice and electronic reports with the NFA. All CPOs are subject to the CFTCs antifraud authority and general market oversight.1
On January 26, 2011, following the 2010 enactment of theDodd-Frank Wall Street Reform and Consumer Protection Act, the CFTC made additions and amendments to the regulation of CPOs. These include two new forms of data collection. The CFTC also introduced requirements for greater reporting of data and amended the requirements for who should register with the CFTC.11In particular, funds that useswapsor other commodity interests may be defined as commodity pools and their operators may be subject to registration with the CFTC, where previously they would not have been.3TheUnited States Chamber of Commerceand theInvestment Company Institutefiled a lawsuit against the CFTC, aiming to overturn this change to rules that would require the operators of mutual funds investing in commodities to be registered, but the lawsuit was unsuccessful and the rule change was upheld.14
Lemke, Thomas P.; Gerald T. Lins; Kathryn L. Hoenig; Patricia S. Rube (2011).
Hedge Funds and Other private Funds: Regulation and Compliance 2011-2012 Edition
The CFTCs final entity rules and their implications for hedge funds and other private funds
. Sutherland Asbill & Brennan LLP. 10 May 2012
Stassen, John H. (1982).The Commodity Exchange Act in Perspective a Short and Not-So-Reverent History of Futures Trading Legislation in the United States.
Rosen, Jeffrey S. (1983).Regulation of Commodity Pool Operators Under the Commodity Exchange Act.
Dodd-Frank Wall Street Reform and Consumer Protection Act
. U.S. Government Printing Office. 21 July 2010
Q & A Conforming Amendments to Part 4 Regulations
Commodity Pool Operators and Commodity Trading Advisors: Amendments to Compliance Obligations
. American Bar Association. pp.4142.ISBN159031297X
, 891 F. Supp. 2d 162 (D.D.C. Dec. 12, 2012),
Loan qualifying investor alternative investment fund(LQIAIF)
Qualifying investor alternative investment fund(QIAIF)
This page was last edited on 27 June 2017, at 09:28