MFA Submits Proposals for CFTC to Consider with respect to § 4.13(a)(3)

MFA submitted a letter to the Commodity Futures Trading Commission (CFTC) urging it to consider adopting new guidance on the application of § 4.13(a)(3) for funds that invest in other collective investment vehicles, such as certain securitization vehicles, certain ETFs, mortgage REITs, and private funds (fund of funds).  At the time many of these vehicles were created, and at the time funds invested in them, CFTC rules did not classify such products as commodity pools, to the extent the CFTC has concluded that certain products are commodity pools.  This new categorization makes the CFTC registration rule changes particularly problematic and potentially very disruptive to strategies employed by MFA members in managing their fund of funds, because members largely cannot secure contractual arrangements with underlying funds, and generally cannot obtain daily, weekly, or even monthly information on an underlying fund’s commodity interest exposure.  Accordingly, MFA urged the CFTC to consider adopting a more simplified alternative methodology for fund of funds to comply with § 4.13(a)(3) and provide recommendations in the comment letter.

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