What if I told you that there is a new regulation on the horizon. A new regulation that requires extensive portfolio reporting. A new regulation that will impact approximately 600 registered funds. A new regulation that is causing portfolio managers to reconsider their trading strategies and product managers to reconsider their fund offerings.
No, I am not talking about the second round of Money Market Reform and the accompanying changes to Form N-MFP. I am talking about CFTC registration and Form CPO-PQR.
The CFTC first removed the exemption provided by Rule 4.5 back in early 2012, creating a whole batch of advisers who are now required to register as both an Investment Adviser with the SEC and a Commodity Pool Operator with the CFTC. For those advisers who manage registered mutual funds, the dual registration created a lot of redundancy and even conflicts between their two registrations, putting things on hold.
Fast forward to late 2013, when the SEC and CFTC harmonized their rules, resolved the redundancy and conflicts in the dual registration, and set the effective dates for compliance, including filing the new Form CPO-PQR, which will need to be done in the early part of 2014.
Despite the similarities in impact – both involve the same amount of funds, both introduce additional regulations and reporting, both have caused investment advisers to reconsider their offering – and despite an effective date that is just around the corner, there is much less buzz in the industry around Form CPO-PQR than Form N-MFP. Even at this late date, a number of investment advisers still have Form CPO-PQR on their to-do list. Fortunately, there is still time to act before the first filing is due in a few months.