Statement of Commissioner Dan M. Berkovitz Regarding Form CPO-PQR Reporting Requirements for Commodity Pool Operators: Final Rule
October 06, 2020
I am voting for the final rule to amend Regulation 4.27 and Form CPO-PQR (Final Rule). This Final Rule makes adjustments to the reporting requirements for Commodity Pool Operators (CPOs) and their pools based on lessons learned over several years since the requirements were first adopted.
Eight years ago, the Commission began collecting information from CPOs on Form CPO-PQR. During that period, the Commission has come to learn that certain information in Form CPO-PQR has not materially improved the Commission’s understanding of CPOs’ participation in commodity interest markets, or its ability to assess the risks their pools may pose. The Final Rule eliminates information that has not proven to be of value to the Commission.
Several commenters suggested that the Commission collect less information on the Pool Schedule of Investments (PSOI) about CPO investments in various asset classes. I support the Commission’s decision in the Final Rule to continue to collect position data about pool investments. To evaluate the risks posed by CPOs and the pools they operate, it is necessary to understand the total portfolio of each pool and its trading strategy. Recent market volatility—including historic price movements in crude oil—underscores the importance of the CFTC’s ability to understand the nature of the participants in our markets and the scope of their activities in order to conduct timely oversight and spot emerging trends or risks.
Since joining the Commission I have supported and encouraged efforts to improve our data and analytical capabilities, and believe they should be expanded in the coming years. Commission staff currently is taking steps to better synthesize swap data for large account controllers and develop a more holistic surveillance program. Once these analytical tools have been further developed, staff will then be in a position to advise the Commission regarding whether any changes to the PSOI are appropriate.
To ensure that the Commission has a complete picture of pool activity across all derivatives markets, it should continue working to integrate swaps data with futures data. Some commenters have suggested that one way to do this would be to require all reporting CPOs and their pools—not just those that trade swaps—to obtain LEIs and submit them on Form CPO-PQR. I encourage the Commission and staff to continue to explore this approach, among others, so that the CFTC is able to aggregate all derivatives transactions by pools under common control.
I would like to thank the Division of Swap Dealer and Intermediary Oversight for their efforts in finalizing this rule in a form that I can support.