The deadline for BDC and RIC managers to re-affirm a claim of exception from CPO registration is approaching

Failure to file an affirmation by March 2, 2026, will be deemed to be a withdrawal of the exemption or exception, which could trigger a registration requirement.

CFTC Regulation 4.5

Of the Part 4 regulations, CFTC regulation 4.5 is relevant to business development companies (BDCs) and registered investment companies (RICs).

Per the Commodity Exchange Act (CEA) and CFTC regulations, a collective investment vehicle that engages in commodity interest (i.e., futures, swaps or options) trading is a “commodity pool”. This definition technically captures BDCs and RICs. Persons who operate commodity pools (i.e., investment managers) are CPOs under the CEA and CFTC regulations. CPOs are required to register with the CFTC (via the National Futures Association (NFA)) and registered CPOs are subject to myriad regulatory compliance obligations.

Among other things, CFTC regulation 4.5 affords an exclusion from the CPO definition for managers of BDCs and RICs. Pursuant to CFTC regulation 4.5, a manager of a RIC or BDC does not need to register as a CPO so long as:

1. The manager does not market the BDC or RIC to the public as an investment in a commodity pool or otherwise as an investment vehicle for the trading of commodity interests
2. The manager represents that it limits the use of commodity interests in the BDC or RIC consistent with a de minimis trading threshold under CFTC Regulation 4.5(c)(2)(iii)(A)-(B);¹ and
3. The manager claims the exception with the NFA and reaffirms its eligibility for the exception annually thereafter.

In addition, disclosure about the BDC or RIC manager’s reliance on the CFTC regulation 4.5 exclusion with respect to the BDC or RIC must be made to investors in writing. This is typically included in the prospectus, annual report on Form 10-K, or quarterly report on Form 10-Q for the BDC or RIC.

NFA Exemptions Filing System

A claim of relief from CPO registration, and reaffirmation thereof, must be made via the NFA’s exemptions filing system, which can be accessed at https://www.nfa.futures.org/electronic-filing-systems/exemptions.html. A BDC or RIC manager will need to use the same account it used to claim exception from CPO registration to reaffirm its eligibility for exception. If any assistance is required, contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

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_{1. The de minimis threshold is an either/or test. It compares the notional amount of a BDC or RIC’s derivatives to the BDC or RIC’s NAV or the amount of margin/premium required for the BDC or RIC’s derivatives to the BDC or RIC’s NAV. The threshold must be satisfied each time a new derivative is entered into as well as when the CFTC regulation 4.5 exclusion is claimed and affirmed.}