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CFTC Finalizes Harmonization Rules: Advisers to RICs Benefit From “Substituted Compliance” for Many Obligations

by Sutherland Asbill Brennan LLP - Washington Office

August 29, 2013

Previously published on August 26, 2013

On August 13, 2013, the Commodity Futures Trading Commission (CFTC) adopted final rules to harmonize certain disclosure, reporting and recordkeeping obligations of commodity pool operators (CPOs) that are investment advisers to registered investment companies (RICs) with applicable federal securities laws. The approach taken by the CFTC in the Harmonization Rules provides welcome relief to CPOs of RICs that would otherwise be facing major changes to operations and substantial administrative burdens in order to comply with all of the CPO compliance obligations and requirements under applicable CFTC and National Futures Association (NFA) rules. Pursuant to the Harmonization Rules, the CFTC afforded relief to CPOs of RICs in the following key areas: (i) disclosure document requirements, (ii) reporting and (iii) recordkeeping. CPOs of RICs may elect to avail themselves of the relief afforded by the Harmonization Rules or comply with CPO obligations. If the former, a CPO of a RIC must claim the relief by filing a notice with the NFA. Notwithstanding the relief provided by the Harmonization Rules, advisers to RICs that are CPOs will still have to ramp-up quickly to comply with the requirements of the CPO regime that remain applicable.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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