The Securities and Exchange Commission adopted amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds, including those that also are registered with the Commodity Futures Trading Commission (CFTC) as commodity pool operators or commodity trading advisers. The amendments, which the CFTC concurrently adopted, are designed to enhance the ability of the Financial Stability Oversight Council (FSOC) to monitor and assess systemic risk and to bolster the SEC’s oversight of private fund advisers and the agency’s investor protection efforts. The SEC and CFTC also agreed to a memorandum of understanding related to the sharing of Form PF data.

“Since Form PF first was adopted, the SEC, CFTC, and FSOC have identified gaps in the information we receive from private fund advisers,” said SEC Chair Gary Gensler. “These amendments to Form PF will enhance the Commissions’ and FSOC’s understanding of the private fund industry as well the potential systemic risk posed by the industry and its individual participants. In addition, the adoption also furthers investor protection efforts.”

Among other things, the amendments to Form PF will enhance how large hedge fund advisers report investment exposures, borrowing and counterparty exposure, market factor effects, currency exposure, turnover, country and industry exposure, central clearing counterparty reporting, risk metrics, investment performance by strategy, portfolio liquidity, and financing and investor liquidity to provide better insight into the operations and strategies of these funds and their advisers and improve data quality and comparability.

Further, the amendments will require additional basic information about advisers and the private funds they advise, including identifying information, assets under management, withdrawal and redemption rights, gross asset value and net asset value, inflows and outflows, base currency, borrowings and types of creditors, fair value hierarchy, beneficial ownership, and fund performance to provide greater insight into private funds’ operations and strategies, to assist in identifying trends, including those that could create systemic risk, to improve data quality and comparability, and to reduce reporting errors. The amendments will also require more detailed information about the investment strategies, counterparty exposures, and trading and clearing mechanisms employed by hedge funds, while also removing duplicative questions, to provide greater insight into hedge funds’ operations and strategies, to assist in identifying trends, and to improve data quality and comparability.

The amendments will become effective one year after publication in the Federal Register. The compliance date for the amendments is the same as the effective date.

Source: SEC

MFA statement on the final SEC-CFTC Form PF rule

Bryan Corbett, MFA President and CEO issued the following statement regarding the final SEC – CFTC Form PF rule:

“The final SEC – CFTC Form PF rule is misguided and will harm regulators’ ability to monitor systemic risk. The final rule requires advisers to submit misleading information to regulators that creates a warped perception of fund activity. The broad, undisciplined request for data will put sensitive proprietary investment strategies at risk, drive industry consolidation, and increase the cost of investing for the benefficiaries of alternative asset managers, including pensions, foundations, and endowments.”

Source: MFA

CFTC Approves a Joint Final Rule to Amend Form PF Regarding Reporting Requirements for All Filers and Large Hedge Fund Advisers

The Commodity Futures Trading Commission announced it has approved a final rule that amends Form PF concurrently with the Securities and Exchange Commission (SEC) as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Form PF is the confidential reporting form for certain investment advisers to private funds that are registered with the SEC, including those also registered with the CFTC. Additionally, the CFTC and SEC have agreed to a memorandum of understanding related to the sharing of Form PF data between the Commissions.

The amendments to Form PF are designed to enhance the Financial Stability Oversight Council’s ability to monitor systemic risk, as well as to bolster the regulatory oversight of private fund advisers and investor protection efforts.

The final rule includes:

(1) Amendments to the General Instructions: These include changes to Form PF’s instructions on reporting (a) master-feeder arrangements and parallel fund structures; (b) private funds that invest in other funds; and (c) timelines.

(2) Amendments Concerning Basic Information about the Adviser and the Private Funds it Advises: These include changes to Form PF’s questions collecting Identifying Information in Section 1a, Information Concerning All Private Funds in Section 1b, and Information Concerning All Hedge Funds in Section 1c.

(3) Amendments Concerning Information about Hedge Funds Advised by Large Private Fund Advisers; and

(4) Other Amendments to Enhance Data Quality.

The effective/compliance date for the Form PF final rule is one year from the date of publication in the Federal Register.

For more information on the Form PF final rule, see the Fact Sheet at Form PF Fact Sheet

Source: CFTC