This is the third conference in a series that will explore possible changes in the regulation of mutual funds.

Commodity pools are collective investments in commodity futures, including financial futures, registered with and regulated by the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), a self-regulatory organization much like the National Association of Securities Dealers. Commodity pools, which may be structured as limited partnerships, are initiated, developed and managed by a commodity pool operator (CPO) and advised by a commodity trading adviser (CTA), both of which are also registered with and regulated by the CFTC and the NFA.

There are approximately 3,000 registered commodity pools, with approximately $500 billion in assets. Most commodity pools are privately placed and are sold only to institutions such as pension plans, university endowments, and other sophisticated investors. A small number of commodity pools are publicly offered and registered with the Securities and Exchange Commission under the Securities Act of 1933. Nevertheless, their corporate governance structures and operations are controlled by CFTC and NFA regulations.

The relationship between the CPO or CTA and a commodity pool has many similarities to the relationship between a mutual fund and its manager or investment adviser—in particular, the fact that the CPO or CTA is interested in earning higher fees for managing the pool while the interest of investors in the pool is to pay lower fees for these services—and this raises the same conflict of interest questions that exist in the mutual fund structure. How these conflict issues are handled by the CFTC and the NFA will be one of the questions explored in this conference.