SEC and CFTC Propose Landmark Relief for Private Fund Advisers: A Strategic Shift in Regulatory Oversight

WASHINGTON, D.C. — April 20, 2026 — In a significant move signaling a shift in the regulatory philosophy governing the U.S. alternative investment sector, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have jointly unveiled a sweeping proposal to amend Form PF. The proposed amendments aim to recalibrate the reporting obligations of private fund advisers, effectively pruning away layers of compliance complexity that industry participants have long criticized as excessive.

This initiative, which seeks to balance the necessity of systemic risk monitoring with the operational realities of investment firms, represents one of the most substantial deregulatory efforts in the financial reporting space in recent years. By raising reporting thresholds and streamlining data collection, the agencies aim to refocus regulatory oversight on the largest, most systemically significant players while relieving the administrative burden on smaller firms.

Main Facts: The Anatomy of the Proposed Changes

The cornerstone of the joint proposal is a fundamental restructuring of the reporting thresholds for Form PF—the confidential document used by regulators to track systemic risk. Currently, the form serves as a primary tool for the Financial Stability Oversight Council (FSOC) to monitor potential threats to the broader financial ecosystem.

Key adjustments to the reporting framework include:

• Elevating the De Minimis Threshold: The agencies propose raising the filing threshold for smaller advisers from $150 million in private fund assets under management (AUM) to $1 billion. This adjustment alone is expected to exempt nearly 50% of the advisers currently subject to Form PF reporting requirements.
• Redefining "Large" Hedge Fund Advisers: The exposure reporting threshold for large hedge fund managers will be raised from $1.5 billion in AUM to $10 billion.
• Targeting Private Credit: Amid the rapid expansion of non-bank lending, the proposal introduces a specific mechanism to identify funds active in the private credit market, ensuring that regulators maintain a clear view of this increasingly important segment of the economy.
• Efficiency and Streamlining: Beyond threshold adjustments, the agencies are proposing to delete or simplify numerous individual data points within the form, targeting redundancies that have historically provided little actionable utility for supervisory staff.

Despite these reductions in scope, the agencies emphasized that the new reporting framework would still capture information covering more than 90% of total private fund gross assets, ensuring that the integrity of systemic risk monitoring remains intact.

Chronology: The Road to Regulatory Recalibration

The road to this proposal is rooted in a multi-year debate regarding the "regulatory creep" that has characterized the post-2008 financial oversight regime.

• 2011-2012: Form PF was originally adopted in the wake of the Dodd-Frank Act to provide FSOC with data on the systemic risks posed by private funds.
• 2022-2024: Following several rounds of expansions under previous commissions, the industry saw an explosion in the granularity and frequency of reporting requirements. Compliance departments at firms of all sizes grew significantly, with smaller firms often noting that the cost of filing threatened their economic viability.
• Early 2025: Following the appointment of new leadership at both the SEC and CFTC, a comprehensive review of existing disclosure mandates was initiated. The mandate was clear: identify areas where the cost of compliance outweighs the regulatory benefit.
• April 20, 2026: The agencies formally released the proposal for public comment, marking the start of a 60-day window for industry stakeholders, investors, and academics to weigh in on the proposed changes.

Supporting Data: Understanding the Burden

To understand why these changes are being proposed, one must look at the data surrounding the current compliance landscape. For years, the Investment Adviser Association and various industry trade groups have argued that the current Form PF structure treats a $200 million fund with the same rigor as a $20 billion hedge fund, creating a "compliance wall" that favors large, established firms over smaller, emerging managers.

The current Form PF requires detailed information on leverage, liquidity, and counterparty exposure. For smaller firms, the internal cost of producing this data—often requiring third-party software and external legal counsel—can run into the hundreds of thousands of dollars annually. By raising the threshold to $1 billion, the SEC and CFTC are effectively acknowledging that firms below this size do not typically possess the leverage or systemic interconnectivity to threaten the broader U.S. financial market.

Furthermore, the data suggests that the "information overload" at the regulatory level has been a persistent issue. Regulators have previously noted that the sheer volume of data received can sometimes obscure the signal from the noise. By streamlining the form, the SEC and CFTC aim to focus on high-quality, actionable intelligence rather than raw, exhaustive data sets.

Official Responses: A Philosophy of "Restoring Balance"

The proposal has been met with a mix of cautious optimism and professional scrutiny. The rhetoric from the agency chairs reflects a departure from the "more is better" approach to disclosure.

SEC Chairman Paul S. Atkins

Chairman Atkins, a vocal proponent of regulatory efficiency, framed the proposal as an essential correction. "A key pillar of my agenda is restoring balance to disclosure obligations and reducing the cost of compliance wherever possible," Atkins stated during the announcement. He argued that prior amendments had drifted from the form’s original intent, becoming an end in themselves rather than a tool for oversight. "Prior amendments to Form PF have led to overly burdensome disclosure requirements for advisers, distracting them from their core investment functions, often without a commensurate benefit to regulators’ use of the collected data."

CFTC Chairman Michael S. Selig

Chairman Selig echoed these sentiments, emphasizing the practical necessity of the update. "By raising the filing threshold and streamlining Form PF, we are taking steps to reduce the burdens associated with filing the form," Selig noted. He pointedly invited the public to provide feedback, stating, "I look forward to reading the public comments to ensure we get these changes right so that we eliminate unnecessary costs and burdens for filers."

Implications: What This Means for the Market

The implications of these proposed amendments are far-reaching, affecting everything from operational costs to the competitive landscape of the private funds industry.

1. Operational Relief for Small-to-Mid-Sized Firms

For firms hovering between $150 million and $1 billion in AUM, the proposal is a game-changer. The removal of the filing requirement will liberate significant capital currently earmarked for compliance infrastructure. This may allow smaller managers to reinvest in research, talent, and technology, potentially enhancing performance for their investors.

2. A Shift in Private Credit Oversight

While the proposal relaxes requirements for many, it simultaneously tightens the focus on the private credit market. As institutional investors have pivoted toward private credit as a source of yield, the sector has grown exponentially. By specifically identifying these funds on Form PF, regulators are signaling that they intend to keep a close watch on this space—not necessarily to burden it, but to ensure they have the visibility required to identify credit bubbles or liquidity mismatches.

3. Strengthening the Systemic Risk Lens

Critics of the proposal might argue that reducing the number of filers could lead to "blind spots." However, the agencies argue that the 90% coverage threshold mitigates this risk. By focusing resources on the largest funds, the SEC and CFTC are adopting a risk-based approach that arguably makes for a more efficient regulatory machine.

4. The Potential for "Right-Sized" Regulation

This proposal may serve as a template for other areas of financial regulation. The concept of "right-sizing"—ensuring that regulatory requirements are proportional to the risk posed by the regulated entity—is a central theme of this administration. If this proposal successfully moves to adoption, it could set a precedent for a broader review of the reporting requirements under the Investment Advisers Act of 1940.

Conclusion: The Path Forward

As the proposal moves to the Federal Register, the industry is expected to mobilize. While the general sentiment from the private fund community is one of relief, the devil will be in the details of the "streamlined" requirements. Firms will be watching closely to see which specific data points are eliminated and whether the new private credit reporting requirements impose a new, unforeseen burden.

The 60-day comment period will be critical. It serves as the final checkpoint before these rules move toward potential codification. For the SEC and CFTC, the challenge remains to prove that they can maintain their mandate of investor protection and market stability while simultaneously fostering an environment where innovation and capital formation can flourish without the weight of unnecessary administrative overhead.

For now, the financial markets wait to see if the "restoration of balance" promised by Chairman Atkins and Chairman Selig will indeed result in a more agile, less costly, and equally robust regulatory environment for the private fund industry.