Ropes & Gray’s Hedge Fund Update: June 2011

Effective July 16, 2011, certain derivatives provisions of the Dodd-Frank Act will become law, including provisions which expand the definition of a "commodity pool" to include a pooled investment vehicle that trades, or may trade, swaps (other than security-based swaps). Similarly, the definitions of a "commodity pool operator" and "commodity trading advisor" will be expanded to include the general partner (or similar entity) and investment adviser, respectively, of a pooled investment vehicle that trades, or may trade, swaps. Under current law, such definitions only apply with respect to pooled investment vehicles that trade, or may trade, futures. The impact of these changes is that a pooled investment vehicle that invests in any interest rate derivatives, commodity derivatives, derivatives over a broad-based securities index or broad-based credit default index, or most types of currency derivatives, for example, will be a "commodity pool" after this date.