[Federal Register: December 26, 2000 (Volume 65, Number 248)]
[Rules and Regulations]
[page 81333-81335]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



17 CFR Part 4

Extension of Time To File Annual Reports for Commodity Pools

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rules.


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: ``kwalek@cftc.gov,'' 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\

    \1\ 65 FR 66663 (November 7, 2000).

    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
    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
    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.

    \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).

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

    \3\ 47 FR 18618-18621 (April 30, 1982).
    \4\ 47 FR 18619-18620.

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.

    \5\ Pub. L. 104-13 (May 13, 1995).
    \6\ 44 U.S.C. 3504(h).

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:


    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

    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
    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

[[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
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 00-32856 Filed 12-22-00; 8:45 am]

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