Earlier in the year, the Commodities Futures Trading Commission (CFTC) repealed a key exemption from registration that a majority of hedge fund advisers had relied on. Set to expire at the end of the year, hedge funds are now gearing up for CFTC registration–in addition to the SEC or state registration requirements that had come into effect this past March.
Newly registered managers who have to sort out the new requirements from both agencies will be doing more than their fair share of head-scratching. While the rules are virtually the same in some areas (such as books and records), there are key differences that will need to be addressed. The CFTC and the SEC have stated that they will be ”harmonizing” their requirements, however, in the meantime, here are a few key differences to be aware of:
1. Financial Statements: The CFTC has a 90 day deadline on submission of financial statements. The SEC custody rules requires that they be distributed to investors within 120 days (or 180 days in the case of fund-of-funds). Therefore, an extension from the CFTC may be required.