Financial Law Blog

Updates on Banking Law, Investment Management Law, Securities Law, Commodities/Derivatives Law

Tag: CPO

CFTC proposes allowing Luxembourg, UK, Irish, and Canadian GAAP in annual reports by CPOs

CPOs are required to provide an annual report to pool participants and the NFA. The report can be either in accordance with GAAP or, subject to certain conditions, IFRS. CFTC Staff, however, have been providing one-off relief to CPOs following accounting conventions of other jurisdictions. The CFTC recently proposed amending its regulations to allow CPOs to report in accordance with U.K. GAAP, New Irish GAAP, Luxembourg GAAP, and Canadian GAAP, subject to certain conditions. If the changes are adopted, CPOs with pools in foreign jurisdictions would not need to request individualized no-action relief should they wish to prepare pool financial statements in accordance with these accounting conventions.

CFTC proposes removing clearing requirement from registration exemption for foreign entities

The CFTC proposed revisions to Regulation 3.10 yesterday which would remove the clearing requirement from the registration exemption for foreign entities.

Regulation 3.10(c) allows foreign entities touching “commodity interest” transactions to not register with the CFTC as CPOs, CTAs, FCMs and IBs so long as they meet certain conditions. For example, with respect to such transactions, the foreign entity must act only on behalf of persons located outside the U.S. The foreign entity would still be subject to all the substantive rules relating to the transactions, but not those rules which relate only to CFTC registrants.

The CFTC proposed doing away with the requirement that foreign entities clear their commodity interest transactions through a registered FCM. Although prior no-action relief from CFTC Staff allowed foreign entities to rely on the exemption without clearing through FCMs, a change by the Commission in the regulation itself would provide more certainty and permanence to foreign entities intending to rely on the exemption.

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