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    Oct. 22, 2026

CFTC Issues Far-Reaching Proposal to Amend Registration Requirements for CPOs and CTAs

On August 18, 2026, the CFTC issued a Notice of Proposed Rulemaking inviting comments on proposed Regulation 4.13(a)(4) (Proposal), which, if adopted as written, will pare down CFTC registration requirements by offering an exemption to SEC-registered investment adviser (RIA) commodity pool operators (CPOs) whose investors are limited to qualified eligible persons. The Proposal also offers an exemption to certain commodity trading advisors from which those CPOs’ pools receive commodity interest trading advice. The Proposal comes on the heels of the CFTC staff’s December 2025 No-Action Letter No. 25‑50 (Letter 25‑50), which partly restored, on an interim basis, a CPO registration exemption that had been established in 2003 and then scuttled during the Dodd-Frank reforms of 2012. This article summarizes Letter 25‑50; breaks down the Proposal and explains its key differences from Letter 25‑50; examines how it will change RIA reporting if adopted as written; considers when deregistration is advisable in light of the Proposal; and offers practical takeaways. See our two-part series on Letter 25‑50: “CFTC No-Action Letter Restores Exemption for Many Asset Managers” (Mar. 12, 2026); and “Making Use of CFTC No-Action Relief” (Mar. 26, 2026).

SEC and CFTC Reg Flex Agendas Highlight Rulemaking Priorities

The SEC and CFTC announced their respective 2026 Agency Rule Lists, or so-called “Reg Flex” agendas, detailing anticipated rulemaking efforts at the proposal and pre-rule stages. The agendas are notable for their deregulatory thrust and, if enacted in their entirety, would reform or eliminate a number of burdensome rules and requirements that fund managers are currently forced to navigate. The rule proposals with the greatest potential impact on the private fund markets include updating the definition of “accredited investor”; enhancing retail exposure to private markets; amending bookkeeping requirements; reforming the Pay to Play Rule; streamlining Form PF reporting; and modernizing applicable custody rules. This article details the status of the ongoing and future rulemaking efforts by the SEC and CFTC; examines the rule proposals that stand to have the greatest impact on the private funds market; and offers practical takeaways for fund advisers based on interviews with assorted legal experts. See “Former SEC and CFTC Officials Unpack the 2026 Enforcement Landscape” (Sep. 10, 2026); and “SEC’s Latest Enforcement Results and Budget Request Affirm Focus on Fraud” (May 21, 2026).

Gauging the Impact of Asset Managers’ Adoption of AI

Asset managers have almost universally implemented artificial intelligence (AI) to some degree, but the benefits vary, according to the Clearwater Analytics Global GenAI Report (Report) released in the summer of 2026. Conducted in March 2026 by independent research agency PureProfile, the Report is based on interviews of 178 senior executives from insurance asset managers, hedge funds, private credit managers and other asset managers based in Europe, the U.S. and Asia. “The firms generating the strongest operational outcomes are not necessarily the ones spending the most on AI, but the ones building on data they can trust,” notes the Report. “AI and the platforms that use it are only as good as the data they run on.” Firms with the biggest AI budgets and/or that had been using AI the longest did not necessarily see the greatest rewards from it. According to the Report, AI “rewards the ones that got the foundation right and underdelivers for the ones still building on data they can’t fully rely on.” This article parses the Report. See “ACA Study Finds Widespread, but Limited, Implementation of AI” (Jul. 16, 2026).

Broker-Dealer Sanctioned for Repeatedly Failing to Fix Compliance Failures ID’d by Exam Staff

In late 2014, prompted by several high-profile technology-based market disruptions, the SEC adopted Regulation Systems Compliance and Integrity (Regulation SCI), which applies to certain self-regulatory organizations, alternative trading systems (ATSs), plan processors and exempt clearing agencies (collectively, SCI entities). Regulation SCI requires SCI entities to adopt and enforce policies and procedures reasonably designed to protect their technological systems; promptly address systems disruptions; and file periodic reports with the SEC regarding such systems. In September 2026, the SEC imposed a substantial fine on a broker-dealer that operates several ATSs for failing to maintain certain policies and procedures mandated by Regulation SCI and, critically, repeatedly failing to remedy compliance deficiencies noted by SEC staff. This article looks at the key requirements of Regulation SCI, the broker-dealer's alleged compliance failures and the terms of its settlement with the SEC. See “SEC 2025 Exam Priorities Stress Core Fiduciary Duties and Effective Compliance Programs” (Dec. 5, 2024); and “Present and Former SEC Attorneys Discuss Retail Investors, CAT Implementation, Enforcement Issues, Reg BI and SRO Oversight” (Dec. 12, 2019).

Using Statistical Analysis to Strengthen Compliance Programs

In assessing the adequacy of corporate compliance programs, regulators are increasingly reviewing how firms use data analytics to fulfil their regulatory obligations. Statistical analysis can enhance compliance programs by helping firms to assess risk, evaluate controls and make data-driven decisions. During an SCCE Data Analytics for Compliance Programs conference held in August 2026, James Rose, managing director at SunHawk Consulting, and Zaina Niles, an associate at Husch Blackwell, spoke about how firms can leverage statistical analysis to strengthen their compliance programs. They discussed regulators’ expectations when it comes to using data analytics; building risk and control matrices; and using statistical analysis to evaluate and improve compliance processes. See “Former Senior SEC Staff Discuss Effective Compliance Programs and Exam and Enforcement Climate” (Dec. 18, 2025).

Eric Perelman Joins Paul Weiss in New York

Paul Weiss announced that Eric Perelman has joined the firm in New York as a partner in the investment funds group. Perelman advises private fund and asset managers on regulatory, compliance and transactional matters, including the formation, offering and governance of private equity funds; general partner-led secondaries vehicles; co-investments; credit funds; and managed account platforms and other investment products. For insights from other Paul Weiss partners, see “U.K. Regulators Propose Changes to AIFM Rules to Ease Compliance Burden on Fund Managers” (Sep. 25, 2025); and “Present and Former SEC Officials Discuss Strategy, Testimony, Proffers and Negotiations” (Feb. 27, 2025).

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