Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR

Cited as:85 FR 26378
Court:Commodity Futures Trading Commission
Publication Date:04 May 2020
Record Number:2020-08496
Federal Register, Volume 85 Issue 86 (Monday, May 4, 2020)
[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]
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                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.
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                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\
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                 \1\ 17 CFR 145.9. The Commission's regulations are found at 17
                CFR Ch. I (2019).
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                 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
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                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\
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                 \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.
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                 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)).
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                 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\
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                 \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.
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                 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\
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                 \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).
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                 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\
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                 \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.
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                 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 http://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
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                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.
                ---------------------------------------------------------------------------
                 \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).
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \54\ 17 CFR 1.16.
                 \55\ 17 CFR 1.3, associated person; 17 CFR 3.12.
                 \56\ 17 CFR 3.12(h)(ii).
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \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).
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \58\ 17 CFR 4.27(d).
                ---------------------------------------------------------------------------
                 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\
                ---------------------------------------------------------------------------
                 \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.
                ---------------------------------------------------------------------------
                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\
                ---------------------------------------------------------------------------
                 \60\ 5 U.S.C. 601 et seq.
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \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).
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \63\ See 44 U.S.C. 3501 et seq.
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \64\ See supra pt. III.A.
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \65\ 5 U.S.C. 500 et. seq.
                ---------------------------------------------------------------------------
                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.
                ---------------------------------------------------------------------------
                 \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).
                ---------------------------------------------------------------------------
                [[Page 26386]]
                 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\
                ---------------------------------------------------------------------------
                 \67\ The Commission rounded the average hours per response to
                the second decimal place for ease of presentation.
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \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.
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \69\ 7 U.S.C. 19(a).
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \70\ 7 U.S.C. 2(i).
                ---------------------------------------------------------------------------
                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
                BILLING CODE 6351-01-P
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                [[Page 26410]]
                [GRAPHIC] [TIFF OMITTED] TP04MY20.020
                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\
                ---------------------------------------------------------------------------
                 \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.
                ---------------------------------------------------------------------------
                 \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\
                ---------------------------------------------------------------------------
                 \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\
                ---------------------------------------------------------------------------
                 \3\ See Proposal at III.C.
                 \4\ See Proposal at IV.
                 \5\ See note 2.
                ---------------------------------------------------------------------------
                 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\
                ---------------------------------------------------------------------------
                 \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.
                ---------------------------------------------------------------------------
                 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.
                ---------------------------------------------------------------------------
                 \3\ See generally id. at Sect. III.
                ---------------------------------------------------------------------------
                 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