CFTC seeks feedback on CPO and CTA rule changes

The CFTC has opened a 45-day comment period on proposals that would double the small-pool exemption threshold to $800,000 and ease registration rules for some fund advisers.
Summary

• The CFTC proposal would create a CPO exemption for qualifying SEC-registered investment advisers.
• A related change would extend registration relief to certain commodity trading advisers.
• The small-pool capital threshold would rise from $400,000 to $800,000.
• Comments will remain open for 45 days after publication in the Federal Register.

CFTC proposal would reduce duplicate fund registration

The Commodity Futures Trading Commission said in an Aug. 18 regulatory announcement that it had proposed amendments to Part 4 of its rules, which govern commodity pool operators, or CPOs, and commodity trading advisers, known as CTAs.

Under the proposal, certain investment advisers already registered with the Securities and Exchange Commission could avoid separate CPO registration for qualifying commodity pools. The exemption would apply only when the pool meets several conditions, including limits on who may invest.

A commodity pool combines money from multiple participants to trade futures, options, swaps, or other commodity interests. Its operator generally must register with the CFTC unless an exemption applies, while a person who provides trading advice may also have to register as a CTA.
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SEC-registered advisers can fall under both regulatory systems when the private funds they manage trade commodity interests. According to the CFTC, requiring full registration under both systems may produce overlapping compliance duties without providing enough additional regulatory benefit.

"By continuing to address overly burdensome and duplicative rules for its registrants, the CFTC is delivering on its mandate to promote U.S. market competitiveness," CFTC Chairman Michael S. Selig said.

Selig added that the agency intended to reduce compliance costs for American businesses while preserving market integrity.

The proposed exemption would not remove all regulatory requirements. Advisers seeking relief would still need to satisfy the SEC's rules under the Investment Advisers Act, including applicable conduct, examination, disclosure, and reporting requirements.

CFTC exemption would cover pools for sophisticated investors

Proposed Regulation 4.13(a)(4) would limit the CPO exemption to SEC-registered investment advisers operating eligible pools for defined groups of sophisticated investors.

Natural-person participants would generally need to fall within Qualified Eligible Person categories that do not require them to pass the CFTC's portfolio test. Eligible entities could include QEPs and certain accredited investors listed under the SEC's Regulation D.

Rather than changing the financial thresholds used to qualify as a QEP, the proposal uses existing investor categories to determine which pools may receive registration relief.

The CFTC previously increased the portfolio thresholds attached to some QEP categories in 2024. Under the updated standard, a person subject to the test may qualify by owning at least $4 million in securities and other assets, holding at least $400,000 in required margin and option premiums, or meeting a combination of the two tests.

Published in September 2024, the final rule doubled the previous thresholds of $2 million and $200,000. Compliance with the new amounts began six months after the rule appeared in the Federal Register.

Separate conditions in the new proposal would require interests in eligible pools to remain exempt from Securities Act registration. Public marketing in the United States would generally be restricted, although pools using Rule 506(c) could conduct general solicitation when every purchaser is an accredited investor and the issuer takes reasonable steps to verify that status.

Where SEC rules require a Form PF filing for an eligible private fund, the adviser would also need to file that form to claim the proposed CFTC exemption. Form PF supplies regulators with information used for investor protection and systemic-risk monitoring.

The CFTC and SEC already operate under a memorandum of understanding that allows them to share Form PF information. The commission said the arrangement could preserve access to fund data without making advisers submit overlapping reports to both agencies.

Eligible advisers would still have to file an exemption notice through the National Futures Association's online registration system. Annual notices would be required to confirm continued reliance on the exemption, along with updates when filed information becomes inaccurate or incomplete.

Proposed rules would formalize temporary CFTC relief

The plan would place parts of existing staff relief into the CFTC's regulations, giving qualifying advisers a formal rule instead of leaving them dependent on a no-action position.

CFTC Market Participants Division Letter 25-50, issued in December 2025, provided interim registration relief for certain SEC-registered advisers managing pools restricted to QEPs. The letter covered some advisers who would otherwise need to register as CPOs or CTAs and also allowed eligible firms to withdraw existing registrations.

Staff issued the relief after the commission had removed a similar QEP exemption in 2012. The earlier exemption, adopted in 2003, allowed operators of certain privately offered pools to avoid registration when participation was restricted to qualifying investors.

According to the new proposal, applying Letter 25-50 alongside National Futures Association processes proved complex and time-consuming. Converting the policy into Regulation 4.13(a)(4) would establish a public set of eligibility conditions adopted through the federal notice-and-comment process.

The CFTC said a final rule would supersede specified no-action positions, including relief provided through Letters 25-50 and 26-06. Until the commission adopts a final rule, however, the proposal does not itself replace the current registration framework or the staff letters.

A related amendment to Regulation 4.14 would extend CTA registration relief to qualifying advisers serving pools covered by the proposed CPO exemption. The CFTC described the CTA change as a limited expansion because many affected advisers already qualify for relief when serving other permitted clients.

Small-pool exemption threshold could double

For smaller fund operators, the proposal would raise the maximum gross capital contributions allowed under the small-pool exemption from $400,000 to $800,000.

Regulation 4.13(a)(2) currently permits an exemption for operators whose pools have no more than 15 participants and whose total gross capital contributions across all operated or planned pools do not exceed $400,000, subject to exclusions for certain contributions.

The commission last adjusted the monetary limit in 2003, when it doubled the threshold from $200,000 to $400,000. Using the Consumer Price Index for All Urban Consumers, the agency calculated that $400,000 in January 2003 had the same purchasing power as approximately $735,097 in July 2026.

Rounding that figure to $800,000 would provide a simpler limit for fund operators, according to the proposal. The 15-participant cap would remain unchanged, as would existing rules that exclude specified contributions from the calculation.

Operators using the expanded exemption would still need to complete initial and annual notice filings. Anti-fraud provisions of the Commodity Exchange Act would also continue to apply to exempt pools.

Crypto policy remains on another CFTC track

The Part 4 proposal does not create a registration system for cryptocurrency platforms or change the CFTC's authority over digital-asset spot markets. Crypto-focused private funds may still be affected when their trading activity makes them commodity pools, but eligibility for relief would depend on the same conditions applied to other qualifying funds.

Meanwhile, crypto.news previously reported that the CFTC's first Innovation Advisory Committee meeting will take place on Aug. 20. Its agenda includes crypto assets, artificial intelligence, and prediction markets, with public statements accepted through Aug. 27.

The committee's crypto session will examine federal market-structure questions, overlapping regulatory authority, customer protection, and market integrity. It will not vote on the CPO and CTA proposal or adopt binding digital-asset rules.

Congress is considering separate legislation that could alter how the SEC and CFTC divide digital-asset oversight. A May review of the CLARITY Act explained that the bill would give the CFTC authority over specified digital commodities while leaving investment-contract assets under SEC oversight.

For the Part 4 rulemaking, written comments must identify RIN 3038-AF61 and reach the Commission within 45 days after the proposal is published in the Federal Register. The CFTC has requested feedback on the proposed exemptions, their eligibility conditions, expected costs and benefits, and the increase in the small-pool capital limit.
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