Key Takeaways
- • MFA submitted a letter to the CFTC supporting a proposal to eliminate duplicative registration requirements for private fund managers already regulated by the SEC, codifying existing staff relief and restoring an exemption rescinded in 2012.
- • The exemption would apply to SEC-registered managers operating privately offered funds limited to sophisticated investors, eliminating the need for dual registration as commodity pool operators with the CFTC and National Futures Association membership.
- • MFA argues duplicative registration imposes unnecessary compliance costs without meaningful regulatory benefit, while the CFTC would retain full authority over derivatives market oversight, market surveillance, and enforcement against fraud and manipulation.
- • MFA recommends targeted transition measures, including avoiding mandatory special redemptions for existing funds and ensuring reliance on the exemption does not trigger additional requirements.
- • The proposal aims to reduce regulatory overlap and provide private fund managers with lasting certainty while protecting investor interests, including pension funds, foundations, and endowments.
Summary
The Managed Funds Association (MFA) has formally backed a Commodity Futures Trading Commission proposal designed to streamline regulatory requirements for private fund managers. In a letter submitted to the CFTC, MFA strongly endorsed the agency's plan to eliminate duplicative registration obligations for certain private fund managers, describing the move as a "smart step toward a more coherent U.S. regulatory framework."
The proposal would make permanent an existing CFTC staff relief provision and restore a registration exemption that the CFTC had rescinded in 2012. Under the exemption, private fund managers already registered with and regulated by the Securities and Exchange Commission would be excused from registering with the CFTC as commodity pool operators or joining the National Futures Association, provided their funds are privately offered and limited to sophisticated investors. According to MFA Chief Legal Officer and Head of Global Regulatory Affairs Jennifer Han, duplicative registration requirements create substantial compliance burdens without corresponding regulatory benefits. "The CFTC's proposal is a smart step toward a more coherent U.S. regulatory framework," Han stated, noting that the exemption would reduce costs for investors including pensions, foundations, and endowments.
Critically, MFA emphasizes that the proposal preserves the CFTC's core regulatory authority. The exemption would not diminish the agency's oversight of derivatives markets, ability to monitor trading activity, or power to police fraud, manipulation, and other misconduct. MFA has recommended that the CFTC take targeted steps to facilitate smooth transition to the permanent exemption, specifically suggesting that existing funds should not be forced to offer special redemptions and that reliance on the exemption should not trigger new compliance requirements unrelated to the core relief.
The proposal would make permanent an existing CFTC staff relief provision and restore a registration exemption that the CFTC had rescinded in 2012. Under the exemption, private fund managers already registered with and regulated by the Securities and Exchange Commission would be excused from registering with the CFTC as commodity pool operators or joining the National Futures Association, provided their funds are privately offered and limited to sophisticated investors. According to MFA Chief Legal Officer and Head of Global Regulatory Affairs Jennifer Han, duplicative registration requirements create substantial compliance burdens without corresponding regulatory benefits. "The CFTC's proposal is a smart step toward a more coherent U.S. regulatory framework," Han stated, noting that the exemption would reduce costs for investors including pensions, foundations, and endowments.
Critically, MFA emphasizes that the proposal preserves the CFTC's core regulatory authority. The exemption would not diminish the agency's oversight of derivatives markets, ability to monitor trading activity, or power to police fraud, manipulation, and other misconduct. MFA has recommended that the CFTC take targeted steps to facilitate smooth transition to the permanent exemption, specifically suggesting that existing funds should not be forced to offer special redemptions and that reliance on the exemption should not trigger new compliance requirements unrelated to the core relief.
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