I respectfully dissent from the Joint Final Rule on Form PF and Reporting Requirements for All Filers and Large Hedge Fund Advisers that is being issued together with the U.S. Securities and Exchange Commission (SEC) (SEC-CFTC Joint Final Rule on Form PF or Joint Final Rule) because, overall, the rule does not achieve its stated purpose to improve systemic risk monitoring because it will obscure hidden risks and unacceptably increase costs for American savers.

When this proposal was adopted in August 2022, I raised my concerns that in a time of economic challenges, including rising inflation, we must be careful when considering proposals that could inhibit positive economic activity that supports American businesses and jobs.[1]  The SEC-CFTC Joint Final Rule on Form PF charges ahead on the wrong path with no consideration for these concerns.

Astoundingly, all rules since the financial crisis have been based on aggregating data for better risk management.[2]  Yet the SEC-CFTC Joint Final Rule on Form PF continues to mandate double, and sometimes triple, reporting,[3] without being based on any demonstrated data or evidence that it will improve systemic risk monitoring. To the contrary, it will hinder the ability of both firms and regulators to truly identify hidden risk. Effective risk management requires aggregation to understand the risk exposure.  Indeed, this is a key pillar of Dodd-Frank reforms. But the Joint Final Rule will force firms to disaggregate risk monitoring and reporting to the individual fund level—obscuring the full picture.

Even worse, the SEC-CFTC Joint Final Rule on Form PF will create a flood of new information of dubious utility that will generate too much noise and is detrimental to data quality, also making it harder to see real risk positions.  And, the Joint Final Rule does nothing to address the many operational and practical implementation issues that will unacceptably increase costs for American savers who have worked hard to earn their retirement investments.

For all these reasons, I cannot support the SEC-CFTC Joint Final Rule on Form PF and must dissent.  This is an unacceptable backsliding on the progress made since the Dodd-Frank Act to strengthen our financial system, mitigate systemic risk, and promote financial stability.

I appreciate the time that the staff spent with my office on this rulemaking.  I would like to thank the CFTC team of Andrew Ruggiero, Elizabeth Groover, Michael Ehrstein, and Pamela Geraghty in the Market Participants Division for their efforts.