Public Statements & Remarks

Statement of Commissioner Kristin N. Johnson Regarding Joint Rule Proposal to Amend Form PF

August 11, 2022

Transparency is an integral component of the regulatory framework that ensures the safety and soundness and enduring preeminence our financial markets.

Working in collaboration with our colleagues at the Securities and Exchange Commission (SEC) to enhance oversight and improve visibility through thoughtfully designed and well-calibrated collection approaches is consistent with our mission and statutory mandate—to “insure the financial integrity of all transactions subject to this Act and the avoidance of systemic risk.”[1]

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)[2] incorporated innovative regulatory features for promoting the stability of the US financial system, including establishing the Financial Stability Oversight Council (FSOC) to monitor for emerging systemic risks that could significantly impact our financial markets and American consumers.[3]

Today’s proposal seeks to further our commitment to achieving these values.  Consequently, I support issuing for comment the proposal to amend Form PF, and look forward to the thoughtful, substantive contributions that the proposed amendments will engender.

Congress in drafting the Dodd-Frank Act recognized that risks with systemic import are best monitored through collaboration amongst the US financial regulators, each with distinct regulatory mandates, and leveraging their resources and expertise to support FSOC’s overarching responsibilities.  Form PF reflects these statutory qualities.  As directed by the Dodd-Frank Act, the Commission and SEC in 2011 jointly issued rules to provide FSOC with important information about private fund operations and strategies through Form PF.[4]

The private fund industry has only grown in size and importance since 2011.  In the third quarter of 2021, private funds reported a staggering $12 trillion of assets on Form PF.[5]  The sheer aggregate size of private funds signifies the potential for events in this industry to produce reverberating effects on the integrity of our financial markets and, in turn, remarkably influence the welfare of American consumers.  Form PF over the last decade has provided financial regulators with needed transparency into this potentially systemically significant sector of the financial system.[6]   

I support the Commissions’ endeavor to build on data collection points that need clarity and to propose revisions in response to changes in financial markets as well as market participants and regulators’ experience with Form PF as a tool for gathering information.  Over the last decade, private funds have adopted new practices, investment strategies and an appetite for investing in non-traditional assets.[7]  The proposed revisions to Form PF aim to adapt to these developments as informed by experience in administering Form PF.

Notwithstanding these important gains, I note that it will be important to hear from and consider the concerns raised by all stakeholders, including for example, concerns regarding the costs and challenges of reporting, particularly for smaller entities.  I anticipate the proposal to amend Form PF will engender important substantive contributions that will refine our understanding of the benefits of data collection, enhance transparency, and improve our ability to preserve the integrity of our markets.

[1]  Section 3(b) of the Commodity Exchange Act, 7 U.S.C. 5(b).

[2]  Public Law 111–203, 124 Stat. 1376 (2010).

[3]   See Sections 111 and 120 of the Dodd-Frank Act.

[4]  Reporting by Investment Advisers to Private Funds and Certain Commodity Pool Operators and Commodity Trading Advisors on Form PF, 76 FR 71128, 71129 (Nov. 16, 2011).

[5]  Amendments to Form PF to Amend Reporting Requirements for All Filers and Large Hedge Fund Advisers (Voting Copy – As approved by the Commodity Futures Trading Commission on 8/10/2022) (Proposed Rules) at 8 n.7,

[6]   See Proposed Rules at 150.

[7]  Proposed Rules at 7–8.