[Federal Register Volume 65, Number 248 (Tuesday, December 26, 2000)]
[Rules and Regulations]
[Pages 81333-81335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32856]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 4


Extension of Time To File Annual Reports for Commodity Pools

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rules.

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SUMMARY: The Commodity Futures Trading Commission (``CFTC'' or 
``Commission'') is adopting amendments to its rules to permit commodity 
pool operators (``CPOs'') to file a claim for an extension of time to 
file a pool's annual report where the pool is invested in other 
collective investment vehicles, and the CPO cannot obtain the 
information its accountant requires about the collective investment 
vehicles in time for the pool's Annual Report to be prepared, audited, 
and distributed by the due date.

EFFECTIVE DATE: December 26, 2000.

FOR FURTHER INFORMATION CONTACT: Kevin P Walek, Assistant Director, 
(202) 418-5463, electronic mail: ``[email protected],'' Division of 
Trading and Markets, Commodity Futures Trading Commission, 1155 21st 
Street, NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: On November 7, 2000, the Commission proposed 
to amend its Rule 4.22 to permit CPOs to file a claim for an extension 
of time to file a pool's annual report where the pool is invested in 
other collective investment vehicles, and the CPO cannot obtain the 
information its accountant requires about the collective investment 
vehicles in time for the pool's Annual Report to be prepared, audited, 
and distributed by the due date.\1\
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    \1\ 65 FR 66663 (November 7, 2000).
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    The 30-day comment period expired on December 7, 2000. The 
Commission received four comment letters, which generally supported the 
proposed rulemaking.
    Two commenters expressed the concern that a CPO that has filed a 
notice claiming an extension of time to file should not be 
unnecessarily burdened by having to make the same

[[Page 81334]]

claim in future years. One of these commenters suggested that, in the 
alternative, the Commission use language contained in prior staff no-
action letters, which indicated that the Commission staff should be 
notified if there is a change in circumstances relating to the relief 
criteria. The Commission considered this approach in the proposed rule, 
recognizing the need to balance the burden of notification with the 
need to ensure that the entity still qualified for the relief. The rule 
does not require that the same claim be made in future years. Rather, 
the rule requires that the CPO simply confirm that the circumstances 
necessitating the relief continue to apply by restating the 
representations required by Rule 4.22(f)(2)(iv). Permitting the CPO to 
file the statement at the same time as the annual report minimizes the 
burden.
    Two of the commenters requested that the Commission provide 
clarification of the procedure by which a CPO needing more than 150 
days to complete an annual report could request an extension of time. A 
third commenter requested that the Commission consider increasing the 
permitted extension to 120 days, or 210 days following the fiscal year 
end.
    Commission staff have reviewed past extension requests and found 
that a substantial majority of the requesters have indicated that they 
can complete their Annual Reports within 150 days of the end of the 
commodity pool's fiscal year. The new extension provisions in Rule 
4.22(f)(2) are intended to provide a standardized and simplified 
extension procedure for this group of CPOs. Only a small number of past 
requests have exceeded the 150-day period. Therefore, in the unusual 
event that a CPO is not able to meet the requirements for this 
streamlined procedure, the CPO may request an extension of time 
pursuant to Rule 4.22(f)(1). In contrast to the procedures of Rule 
4.22(f)(2), under which relief may be obtained automatically upon the 
filing of the required notice and representations, a request under Rule 
4.22(f)(1) is not granted automatically, and must include detailed 
supporting documentation to justify the need for the extension. 
Additionally, Section 140.99 of the Commission's regulations provides a 
mechanism for obtaining relief in those cases that do not fall within 
the bounds set by Rule 4.22(f)(1) or (f)(2).
    Finally, one commenter suggested that the Commission clarify that a 
CPO's claim for an extension of time is effective upon receipt of the 
claim by the CFTC. The word ``claim'' in the rule indicates that, if 
all the relevant criteria apply, the CPO needs only to file the 
specified notice to obtain the relief. Thus, a claim made pursuant to 
Rule 4.22(f)(2) is effective upon receipt.
    The rule will be effective upon publication in the Federal 
Register.\2\ It is the Commission's intention that CPOs may follow this 
revised rule in filing Annual Reports due to be filed in calendar year 
2001 for fiscal years ending in 2000.
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    \2\ This rule amendment establishes a mechanism to obtain an 
exemption from the current temporal requirements of Rule 4.22(f). 
Accordingly, this rule amendment may be made effective less than 30 
days after its publication herein. See 5 U.S.C. 553(d)(1).
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Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-611 (1994), 
requires that agencies, in proposing rules, consider the impact of 
those rules on small businesses. The Commission has previously 
established certain definitions of ``small entities'' to be used by the 
Commission in evaluating the impact of its rules on such entities in 
accordance with the RFA.\3\ The Commission previously has determined 
that registered CPOs are not small entities for the purpose of the 
RFA.\4\ In this regard, the Commission notes that it did not receive 
any comments regarding the RFA implications of the amendment to Rule 
4.22(f).
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    \3\ 47 FR 18618-18621 (April 30, 1982).
    \4\ 47 FR 18619-18620.
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B. Paperwork Reduction Act

    This rule (Section 4.22(f)) contains information collection 
requirements. As required by the Paperwork Reduction Act of 1995,\5\ 
the Commission has submitted a copy of this rule to the Office of 
Management and Budget (OMB) for its review.\6\ In response to the 
Commission's invitation in the proposed rulemaking to comment on any 
potential paperwork burden associated with this regulation, no comments 
were received.
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    \5\ Pub. L. 104-13 (May 13, 1995).
    \6\ 44 U.S.C. 3504(h).
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List of Subjects in 17 CFR Part 4

    Brokers, Commodity futures.

    In consideration of the foregoing and pursuant to the authority 
contained in the Commodity Exchange Act and in particular sections 
2(a)(1), 4l, 4m, 4n, 4o, and 8a, 7 U.S.C. 2, 6l, 6m, 6n, 6o, and 12(a), 
the Commission hereby proposes to amend Chapter I of Title 17 of the 
Code of Federal Regulations as follows:

PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS

    1. The authority citation for Part 4 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 4, 6b, 6c, 6l, 6m, 6n, 6o, 12a, and 
23.

    2. Section 4.22 is amended by:
    a. Redesignating paragraphs (f)(1) introductory text, (f)(1)(i), 
(f)(1)(ii), (f)(1)(iii), (f)(1)(iv), and (f)(1)(v) as (f)(1)(i) 
introductory text, (f)(1)(i)(A), (f)(1)(i)(B), (f)(1)(i)(C), 
(f)(1)(i)(D), and (f)(1)(i)(E);
    b. Redesignating paragraphs (f)(2) introductory text, (f)(2)(i), 
and (f)(2)(ii) as (f)(1)(ii) introductory text, (f)(1)(ii)(A), and 
(f)(1)(ii)(B);
    c. Redesignating paragraphs (f)(3) introductory text, (f)(3)(i), 
and (f)(3)(ii) as (f)(1)(iii) introductory text, (f)(1)(iii)(A), and 
(f)(1)(iii)(B); and
    d. Adding a new paragraph (f)(2) to read as follows:


Sec. 4.22  Reporting to pool participants.

* * * * *
    (f) * * *
    (2) In the event a commodity pool operator finds that it cannot 
obtain information necessary to prepare certified financial statements 
for a pool that it operates within the time specified in either 
paragraph (c) of this section or Sec. 4.7(b)(3)(i), as a result of the 
pool investing in another collective investment vehicle, it may claim 
an extension of time under the following conditions:
    (i) The commodity pool operator must, within 90 calendar days of 
the end of the pool's fiscal year, file a notice with National Futures 
Association and the Commission, except as provided in paragraph 
(f)(2)(v) of this section.
    (ii) The notice must contain the name, main business address, main 
telephone number and the National Futures Association registration 
identification number of the commodity pool operator, and name and the 
identification number of the commodity pool.
    (iii) The notice must state the date by which the Annual Report 
will be distributed and filed (the ``Extended Date''), which must be no 
more than 150 calendar days after the end of the pool's fiscal year. 
The Annual Report must be distributed and filed by the Extended Date.
    (iv) The notice must include representations by the commodity pool 
operator that:
    (A) The pool for which the Annual Report is being prepared has 
investments in one or more collective investment vehicles (the 
``Investments'');

[[Page 81335]]

    (B) The commodity pool operator has been informed by the certified 
public accountant selected to audit the commodity pool's financial 
statements that specified information establishing the value of the 
Investments is necessary in order for the accountant to render an 
opinion on the commodity pool's financial statements. The notice must 
include the name of the accountant; and
    (C) The information specified by the accountant cannot be obtained 
in sufficient time for the Annual Report to be prepared, audited, and 
distributed before the Extended Date.
    (v) For each fiscal year following the filing of the notice 
described in paragraph (f)(2)(i) of this section, the commodity pool 
operator may claim the extension of time by filing a statement 
containing the representations specified in paragraph (f)(2)(iv) of 
this section, at the same time as the pool's Annual Report.
    (vi) Any notice or statement filed pursuant to paragraph (f)(2) of 
this section must be signed by the commodity pool operator in 
accordance with paragraph (h) of this section.
* * * * *

    Issued in Washington, D.C., on December 20, 2000 by the 
Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 00-32856 Filed 12-22-00; 8:45 am]
BILLING CODE 6351-01-P