The Managed Funds Association ("MFA") made recommendations on how to simplify Form PF reporting by dually registered investment advisers and commodity pool operators ("dually registered firms"). In a letter to the CFTC, the MFA made the following suggestions for improving the accuracy and relevancy of information provided to regulators while reducing the regulatory burden for firms:
- adopt a single risk report for a dually registered firm by either consolidating Form PF and Form CPO-PQR into a single form, or permitting the dually registered firm to file only a single risk report with both the SEC and CFTC;
- require firms to file Forms PF on an annual basis, and reduce the update requirements applicable to large hedge fund advisers;
- mandate the use of alphanumeric identifiers within Form PF to protect the identity of firms and the funds they advise from the misuse of confidential information in the event of cyberattacks;
- revise certain questions in Form PF to focus more accurately on systemic risk, such as questions on counterparty credit risk, investment concentration and market stress; and
- eliminate questions that are duplicative or overly complex.
The MFA Letter includes a markup of Form PF, with recommended edits to specific questions.
Commentary / Steven Lofchie
The information collected by Form PF is almost entirely useless because the questions are badly drafted; it is likely that the authors of the questions did not fully understand the relevant law or the economics of the subject matter. Undertaking to improve the form by eliminating useless questions essentially means discarding the form as is. If the regulators want to maintain Form PF (or something under that moniker) as a useful document, they are going to have to go back to the beginning and rethink it entirely.
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