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Significant Changes to CFTC Regulations Impacting Registered Investment Companies

14 March 2012

The Commodity Futures Trading Commission recently adopted amendments to Rule 4.5 under the Commodity Exchange Act that will greatly narrow that rule’s exclusion for advisers to registered investment companies from regulation as commodity pool operators. Amended Rule 4.5 will require advisers to registered funds to either limit the funds’ use of futures contracts, options on futures contracts, leverage contracts, retail forex contracts, and non-security-based swaps or submit to dual regulation by the CFTC and the Securities and Exchange Commission. Registered funds that currently invest in these commodity interests will need to evaluate their investment and compliance programs before the amendments to Rule 4.5 take effect. 

On March 14, the firm's New York office held a comprehensive seminar on how these new regulatory developments will impact many registered investment companies. Panelists discussed and answered questions on the following topics, among others:

  • Trading limits under amended Rule 4.5, including bona fide hedging and de minimis tests
  • Limitations on marketing funds as commodity pools
  • Use of controlled foreign corporations to invest in commodity interests
  • Compliance dates for amended Rule 4.5 and effect on the launch of new funds
  • Registration process for commodity pool operators and licensing requirements for associated persons
  • Proposal to harmonize CFTC/SEC requirements

Panelists Included:

  • Beth R. Kramer (Introduction), Partner, K&L Gates New York
  • Rachel H. Graham, Senior Associate Counsel, Investment Company Institute
  • Mark C. Amorosi, Partner, K&L Gates Washington, D.C.
  • Susan I. Gault-Brown, Partner, K&L Gates Washington, D.C.
  • Cary J. Meer, Partner, K&L Gates Washington, D.C.

To view a recording of the event, please click here.

To download the presentation materials, please click here.