Public Statements & Remarks

Statement of Commissioner Dan M. Berkovitz on Proposed Rule to Amend Form CPO-PQR Reporting Requirements for Commodity Pool Operators

April 14, 2020

I am voting in favor of this proposed rule to amend Regulation 4.27 and Form CPO-PQR (“Proposal”).  The information in Form CPO-PQR that no longer would be required under the Proposal has not proven to be useful to the Commission in identifying or measuring systemic or idiosyncratic risk.

In the wake of the financial crisis and the enactment of the Dodd-Frank Act, the Commission required certain commodity pool operators (“CPOs”) to report on Form CPO-PQR a variety of data that, at the time, the Commission believed would enable it to assess risks presented by pooled commodity investment vehicles, such as a pool’s exposure to certain asset classes and susceptibility to market stress.[1]  As the Proposal explains, however, the Commission’s experience over the past seven years has unfortunately demonstrated that some of the information on Schedules B and C of Form CPO-PQR has not been useful for these purposes.  The Proposal would amend the Form CPO-PQR requirements to eliminate the information that has not proven to be of value to the Commission, yet retain the requirements to report useful information, such as the pool schedule of investments.[2]

At the same time as the Commission streamlines its data collection requirements, it must also make better use of the data that it does collect.  The Commission gathers a diverse and large array of data on a daily basis for over-the-counter and exchange-traded derivatives transactions.[3]  As the Proposal notes, these data sets have the potential to be more useful for risk monitoring and surveillance purposes than certain static information collected quarterly through Form CPO-PQR.  But the Commission still has a long way to go before it can use such data to perform a comprehensive, forward-looking analysis of our markets.  The Commission should improve its strategies and capabilities for aggregating and analyzing the information it will continue to receive.

The Proposal would take one step in this direction by requiring CPOs using the swap markets to report legal entity identifiers (“LEIs”).  Collecting LEIs is important because they allow the Commission to aggregate SDR data from related pools, thereby furthering our understanding of the role these pools play in our markets.  However, the Proposal does not require all firms, such as those that do not trade swaps, to obtain and report LEIs, so this amendment will not allow the Commission to aggregate all derivatives transactions by pools under common control.  The Commission can and should do more to integrate and analyze all of the data at its disposal.

Finally, I am pleased that the comment period for this Proposal is 60 days.  Providing the public with sufficient time to prepare meaningful comments to our rules in these extraordinary times is good public policy.

I encourage the public to comment on this Proposal.  In particular, the Proposal acknowledges that by removing from Form CPO-PQR some of the pool-specific data in Schedules B and C, less information would be available to the Financial Stability Oversight Counsel (“FSOC”).  The Proposal also notes, however, that FSOC otherwise receives comparable data for the large portion of dually registered CPOs via Form PF.  I am interested in commenters’ views on whether this amendment would affect FSOC’s ability to monitor for systemic risk.

I would like to thank the staff, particularly the Division of Swap Dealer and Intermediary Oversight, for their engagement with my office on this Proposal.  I look forward to the Commission articulating further steps to enhance its surveillance of commodity pools, and our markets more broadly.


[1] See Final Rule, Commodity Pool Operators and Commodity Trading Advisors: Amendments to Compliance Obligations, 77 FR 11252, 11252 (Feb. 24, 2012).

[2] “The eliminated data elements include detailed, pool-specific information, provided on both the individual and aggregate level, such as questions about investment strategy and counterparty credit exposure, asset liquidity and concentration of positions, clearing relationships, risk metrics, financing, and investor composition.”  Proposal, Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR, at Sect. III.A.

[3] See generally id. at Sect. III.