CFTC Closes a Loophole for Exempt Commodity Pool Operators
Highlights
New CFTC regulation requires persons seeking exemption from Commodity Pool Operator (CPO) registration requirements to affirm that neither the CPO nor its principals have a “statutory disqualification”
The new regulation is intended to close an existing regulatory gap by eliminating the inconsistent treatment of exempt and registered CPOs
For CPOs who wish to rely on the exemptions offered under the Commodity Exchange Act – despite the new regulation – additional compliance measures may be necessary
On September 8, 2020, amendments to Commodity Futures Trading Commission (CFTC) Regulation 4.13, which sets forth exemptions to the registration requirements for Commodity Pool Operators (CPOs), went into effect. The new regulation, codified as Regulation 4.13(b)(1)(iii), requires persons seeking exemption from the usual CPO registration requirements to represent in their application for exemption that “neither the person [seeking exemption] nor any of its principals has in its background a statutory disqualification that would require disclosure under Section 8a(2) of the [Commodity Exchange Act (CEA)] if such person sought registration” as a CPO.
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