In a September 21st TSR posting, entitled “CFTC Rule 4.5: Back to the Future” we drew your attention to a recent Notice and Request for Public Comment that was published by the CFTC in respect of a petition that was filed by the National Futures Association with the CFTC in August of this year. Well, the comment period closed and, as you would expect, there were voices in favor of the NFA’s position and voices opposed to the NFA’s petition – should you be so inclined, you can find all of those comment letters here.

As a courtesy update, that is the current status – the CFTC asked for and received industry views, but no “official” proposed rules have been published by the CFTC (we think that might have something to do with the fact that 7 other rules have been published this week, but that is just a guess).


As you may recall, we called that posting “CFTC Rule 4.5: Back to the Future” due to the fact that the NFA was, in essence, looking to revise CFTC Rule 4.5 to re-insert a “5% Test” and a “Marketing Restriction” that were removed from the rule in 2003.  In other words, the NFA expressed its desire to go back to the pre-2003 version of the rule. Get it? Get it? Right, back to the future. Snappy, isn’t it?

Now, regardless of your view of the NFA’s position, we wanted to go back a little bit further than 2003 in the regulatory archives. In fact, we want to go all the way back to 1975 – not because the Pittsburgh Steelers defeated the Minnesota Vikings 16-6 on January 12th, of that year. Rather, it is because…well…you figure it out – you are bright readers

CFTC 1975 NFA 2010
Congress, in enacting the pool operator provisions, was fully cognizant of the scope of the existing federal securities laws, and yet did not see fit to exclude SEC-regulated entities from the pool operator definition…Furthermore, while the federal securities laws afford investors with substantial protection and require investment companies to furnish their shareholders with certain information, investment companies, unlike [CPOs], are not required to furnish shareholders with information concerning commodity futures positions of the pool or of the operator’s principals. NFA strongly believes that in circumstances in which no qualification requirement exists for fund participants, then NFA and the CFTC should have regulatory oversight of collective investment vehicles that engage in more than a de minimis amount of futures trading.

NFA believes that a registered investment company…that engages in more than a de minimis amount of non-hedge futures trading should be subject to the CFTC’s Part 4 regulatory requirements and protections, and the oversight of the CFTC and NFA who have the experience and expertise in regulating managed futures products.

Ok – it may not be verbatim, but we are pretty sure that there is somewhat of an echo, echo, echo…

As an aside, if anybody is wondering – as of this day in 2010 – the Steelers stand at 5-2 and the Vikings stand at 2-5 – so let’s not get carried away with this stuff.

Good day, good reading. TSR