New regulations from the Commodity Futures Trading Commission and the National Futures Association (NFA) will soon impact hedge funds, adding more data collection and reporting requirements on top of the SEC's Form PF.
The new regulations apply to registered commodity pool operators (CPOs) and commodity trading advisors (CTAs).
Today, Park River Fund Solutions and MIK Fund Solutions said they were joining together to provide fund firms with a comprehensive solution to the new regulatory requirements of Forms CPO-PQR and CTA-PR, which will complement their existing Form PF solution.
MIK will utilize its regulatory software platform, while ParkRiver will consult with managers and provide outsourced resources for the preparation of the quarterly and annual reports.
The CFTC and the NFA have adopted new data collection and risk reporting requirements for registered CPOs and CTAs. Forms CPO-PQR and CTA-PR require varying degrees of transparency including:
• Basic information about each CPO and the pools it operates
• Each pool’s monthly rates of return
• The identities of significant creditors, credit counterparty exposure, trading and clearing mechanisms
• Details on asset liquidity, pool risk metrics, derivative positions, posted collateral and portfolio turnover.
The frequency and level of reporting required by NFA Compliance Rule 2-46, as proposed, and CFTC Rule 4.27 hinges on the size of each CPO and underlying pools as well as other specific characteristics of the entity (such as whether it is also filing Form PF with the SEC).
Outsourcing CFTC filing requirements to a team of technology and commodity compliance specialists can be an efficient solution for funds reporting on Form CPO-PQR and CTA-PR, according to both companies in their joint release.
“Fund managers will spend a lot of time and resources determining the best course to prepare themselves for the new reporting requirements of the SEC and CFTC coming into effect this year,” comments Michael Coppola, CEO of Park River in today’s release.
Handling the process of data collection, documentation and back-up retention can be too time consuming and costly to manage in-house, according to ParkRiver and MIK. They plan to provide a qualified team with in-depth knowledge and expertise which can provide significant value in assessing the various filing requirements
“At ParkRiver we are confident that our experienced team, in conjunction with MIK’s software, brings both the technology and expertise to plan and execute an efficient filing and record-keeping system," stated Coppola. "In the current environment of heightened transparency and evolving regulation, it is crucial that service providers create better solutions to relieve fund managers and let them stay focused on portfolio management," added Coppola.
In the same release, Marshall Saffer, COO of MIK, said, “Rather than diverting important internal resources, the routinized solution provided by the ParkRiver and MIK gives managers the confidence that they are in compliance without putting undue costs on the firm. That has been our experience with SEC Form PF and we expect that to hold true over the course of reporting-based regulation, regardless of regulator or region.”
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio