Rules Relating to the Operations and Activities of Commodity Pool Operators and Commodity Trading Advisors and to Monthly Reporting by Futures Commission Merchants

Forms and Documents

Document Name	Status
Form CTA-PR Part-4 Commodity Pool Operators and Commodity Trading Advisors Form and Instruction	Modified
2023 Supporting Statement 3038-0005 (Part 4.7 NPRM).docx Supporting Statement A	2023-12-11

IC Document Collections

IC ID	Document Title	Status
29006	Part-4 Commodity Pool Operators and Commodity Trading Advisors Form and Instruction	Modified

ICR Details

OMB Control No: 3038-0005	ICR Reference No: 202312-3038-002
Status: Received in OIRA	Previous ICR Reference No: 202306-3038-006
Agency/Subagency: CFTC	Agency Tracking No:
Title: Rules Relating to the Operations and Activities of Commodity Pool Operators and Commodity Trading Advisors and to Monthly Reporting by Futures Commission Merchants
Type of Information Collection: Revision of a currently approved collection	Common Form ICR:  No
Type of Review Request: Regular	Date Submitted to OIRA: 12/11/2023

	Requested	Previously Approved
Expiration Date	36 Months From Approved	12/31/2026
Responses	121,490	120,415
Time Burden (Hours)	328,005	432,325
Cost Burden (Dollars)	0	0

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Abstract: The disclosure, filing, and recordkeeping requirements within part 4 of the Commission’s regulations were established to assist customers, to facilitate the Commission and the National Futures Association (NFA) in monitoring compliance with the part 4 rules, and to enable the Commission to better monitor the market risks posed by the Commission’s registrants. The information collections are necessary to enable the Commission and NFA to accomplish the purposes of the compliance regime set forth in part 4 of the Commission’s regulations. The Commission is proposing amendments to Regulation 4.7, which provides exemptions from the disclosure, periodic reporting, and recordkeeping requirements discussed above, with respect to those registered CPOs and CTAs who solicit and offer their commodity pools and advisory programs solely to financially sophisticated individuals and entities referred to by the regulations as, “qualified eligible persons” (QEPs). Currently, such CPOs and CTAs must file a claim for each pool or trading program they offer and operate, pursuant to Regulation 4.7(d), that also specifies which of the exemptions the intermediary wishes to utilize. Since its adoption over thirty years ago, the Commission has only occasionally amended Regulation 4.7 to update its provisions so they remain fit for purpose and to enhance the usability of the regulation. It is the Commission’s view, however, that certain aspects of Regulation 4.7 have become outdated. As a result, the Commission is considering the amendments described herein. This Supporting Statement explains the proposed revisions to this information collection, to ensure the burden hour estimates for the disclosures, reporting and recordkeeping under this clearance are consistent with the proposed amendments to Regulation 4.7 described below. The NPRM proposes increases to financial thresholds in the QEP definition currently found in Regulation 4.7(a), to reflect impacts of inflation since its original adoption in 1992. Additionally, the proposed amendments would establish minimum content and usage requirements under Regulation 4.7 regarding the offering memoranda and trading brochures CPOs and CTAs routinely provide to their prospective and actual QEP pool participants and advisory clients (QEP Disclosures). Accordingly, the Commission proposes to revise this information collection to include reporting burden associated with this proposed QEP Disclosure requirement that, if adopted, would apply to CPOs and CTAs operating pools and trading programs under Regulation 4.7. These added reporting burdens would be based upon those already associated with Regulations 4.21/4.26 and 4.31/4.36 below, but would be proportionate to the more limited scope of disclosures that the Commission is proposing to require from CPOs and CTAs relying on Regulation 4.7. The proposed amendments would also require CPOs and CTAs to maintain the proposed QEP Disclosures as business records of their registered CPO and CTA activities subject to Commission oversight. Therefore, the Commission is revising this collection to include the burden associated with this proposed recordkeeping requirement, reflected in small increases to the existing burden calculations for Regulations 4.7(b)(5) and (c)(2).

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Authorizing Statute(s): US Code: 7 USC 6l, 6m, 6n, 6o Name of Law: CEA
   US Code: 7 USC 1a, 2, 12a, 23 Name of Law: CEA
   US Code: 7 USC 6(c), 6b, 6c Name of Law: CEA
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
3038-AF25	Proposed rulemaking	88 FR 70852	10/12/2023

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Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 1

IC Title	Form No.	Form Name
Part-4 Commodity Pool Operators and Commodity Trading Advisors	CTA-PR, CPO-PQR	CTA-PR ,   CPO-PQR

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ICR Summary of Burden

	Total Request	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	121,490	120,415	0	1,075	0	0
Annual Time Burden (Hours)	328,005	432,325	0	-104,320	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: No

Burden Increase Due to:

Burden decreases because of Program Change due to Agency Discretion: Yes

Burden Reduction Due to: Changing Regulations

Short Statement: The attached NPRM proposes multiple amendments to Regulation 4.7, the reporting and recordkeeping burdens of which are reflected in Attachment A. In connection with these proposed amendments, the Commission is revising its estimate of the number of respondent CPOs and CTAs subject to the information collection requirements under this clearance. This revision would reduce the estimated number of respondents from 3,900 respondents in total, to 2,000 respondents, consisting of 1,000 registered CPOs and 1,000 registered CTAs. These updated figures are based on the Commission’s review of data from fiscal year 2022 collected and provided to it by NFA, which—through authority delegated by the Commission—administers and implements significant portions of the Commission’s registration and compliance regulations for intermediaries, including CPOs and CTAs. Based on these proposed amendments, and its analysis of recent data regarding the usage of Regulation 4.7 exemptions by registered CPOs and CTAs, the Commission is revising this information collection as follows: (a) reducing the total respondents for Regulation 4.7 and its various subparagraphs to 2,000 respondents, or 1,000 CPOs and 1,000 CTAs and adjusting the number of pools or trading programs per respondent; (b) adding a reporting burden to recognize a monthly alternative account statement schedule that would become available to CPOs of Fund of Funds pools relying on Regulation 4.7(b)(3); and (c) adding reporting and recordkeeping burdens to account for the proposed minimum content and use requirements for QEP Disclosures provided by CPOs and CTAs utilizing Regulation 4.7. As amended below, the Commission believes that the burden calculations presented in this Supporting Statement are an accurate estimate of the total burden hours under this information collection, as impacted by the proposed amendments in the attached NPRM.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Does this ICR request any personally identifiable information (see OMB Circular No. A-130 for an explanation of this term)? Please consult with your agency's privacy program when making this determination.     Yes

Does this ICR include a form that requires a Privacy Act Statement (see 5 U.S.C. §552a(e)(3))? Please consult with your agency's privacy program when making this determination.     No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? Yes

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? No

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Common Form ICR:  No

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On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 12/11/2023

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