The Commodity Futures Trading Commission has published proposed regulations that would provide certain exemptions to commodity pool operators where units of participation in their commodity pools are both sold in a registered public offering under the Securities Act of 1933 and listed for trading on a national securities exchange.
Under proposed amendments to Regulation 4.12, the registered commodity pool operator of such a pool (a commodity exchange-traded fund) would be able to claim exemption from certain disclosure, reporting and recordkeeping requirements under CFTC regulations, based in part on substituted compliance with corresponding Federal securities law requirements.
Specifically, while they would remain obligated to provide the same disclosure information, make the same periodic reports and keep the same books and records as they are currently required to, they would not have to:
• Obtain a signed acknowledgment of receipt for the disclosure document, if the disclosure document is made readily accessible on the commodity pool operator’s website and prospective participants are informed of this fact.
• Deliver monthly account statements, if the required information and certification are readily available on the commodity pool operator’s website and the disclosure document and selling broker-dealers clearly inform pool participants of that availability.
• Keep all required books and records at the commodity pool operator’s main business address, if the alternate recordkeeper is the pool’s custodian, distributor or similar service provider, and the alternate recordkeeper agrees to provide ready access to pool participants, CFTC representatives and other authorisd persons.
Under proposed amendments to Regulation 4.13, where a particular commodity ETF is required under the Sarbanes-Oxley Act of 2002 and exchange listing requirements to have an audit committee composed of independent directors or trustees, and the independent directors or trustees who comprise the audit committee have that as their only purpose for serving as directors or trustees, the proposed amendments would make exemption from CPO registration available for them.
Exemption under the proposed regulations would be claimed by filing a notice with the National Futures Association.