Statement of Support by Commissioner Brian D. Quintenz Regarding Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR
April 14, 2020
I support today’s proposal that would simplify and streamline the reporting obligations of commodity pool operators (CPOs) on Form CPO-PQR. The proposal would eliminate much of existing Schedules B and C, which together contain roughly 72 distinct questions, if one includes all the separately identifiable subparts. Many of these questions are challenging for CPOs to calculate precisely and require numerous underlying assumptions that vary from firm to firm, making it difficult, if not impossible, for the Commission to perform an apples-to-apples comparison across the commodity pool industry.
Moreover, in my opinion, many of these questions are more academic than pragmatic in nature – information that may be nice for the Commission to have, but data that is certainly not necessary for the Commission to effectively oversee commodity pools and the derivatives markets. For example, under the proposal, the Commission would no longer request information about the geographical breakdown of a pool’s investments or the aggregate value of a pool’s derivatives positions—the latter of which provides almost no insight into a pool’s actual risk because it does not take into account collateral. I would also note that large pools file the Form CPO-PQR within 60 days of the end of a calendar quarter. This means that by the time Commission staff receives the information on the form, it is already stale and out-of-date, which seriously diminishes its utility for purposes of real-time monitoring of risk or market activity.
Importantly, the proposal retains questions regarding a pool’s schedule of investments, which contains information that is critical for the National Futures Association’s and the Commission’s supervision and examination programs for CPOs. The proposed revisions to Form CPO-PQR would also align the Commission’s form with the NFA’s Form PQR, which will simplify the filing process for CPOs and ensure the Commission has the same visibility as the NFA into the operations of CPOs. I am also pleased the proposal would require CPOs and their operated pools to include their legal entity identifiers (LEIs), to the extent they have LEIs due to their swap trading activity. The inclusion of LEIs will enable the Commission to aggregate the information reported on the Form CPO-PQR with the swap data information reported to the Commission under Part 45. Over time, I hope this will provide the Commission with a greater understanding of how a CPO’s swap activities complement its other investment activities.
The proposal also requests comment on whether there are ways the Commission could clarify or refine its instructions for completing the Form CPO-PQR. I encourage market participants to take a close look at the form’s instructions and related frequently asked questions documents to determine if the filling process can be simplified.
In closing, I would like to thank the Division of Swap Dealer and Intermediary Oversight for its hard work in advancing this important proposal.