The Chamber of Commerce and the Investment Company Institute have appealed a judge’s decision that allows the Commodity Futures Trading Commission to begin new oversight of mutual funds and exchange traded funds that invest in commodity futures, swaps and options.
Earlier this year, the CFTC removed established exemptions for registered investment companies (RICs) once they exceed established thresholds for commodity investments. RICs can utilize futures, options and swaps only for “bona fide hedging,” unless the initial margins and premium for non-hedging activities do not exceed 5 percent of the fund’s liquidation value. Otherwise, they must register with the CFTC as commodity pool operators and adhere to new reporting, disclosure, and recordkeeping requirements. As CPOs, they must also become members of the National Futures Association, a self-regulatory organization, and meet its additional compliance rules and licensing examinations.
