All Letters

98-01 ; Part 35; Interpretation
The Division of Trading and Markets provided an interpretation of the availability of Part 35 relief for U.S. persons that qualify as eligible swaps participants who enter into swap agreements with non-U.S. financial institutions. The Division confirmed that as long as both the U.S. person and the non-U.S. financial institution qualify as eligible swaps participants, and all other conditions of Part 35 are met, then the swap agreement qualifies for treatment pursuant to Part 35.

98-05 ; Section 4d(2) of the Act; Commission Rules 1.25 and 1.31; No-Action
In CFTC Interpretative Letter No. 96-78 (f26,822), enforcement action was not recommended against FCM clearing members of a contract market based solely upon their investment of customer funds in a program involving the establishment of two limited liability company accounts that would allow clearing members to direct that customer funds and, separately, proprietary funds deposited with the clearing organization be placed in the limited liability company accounts, subject to various conditions. Further relief is now granted to permit the use of repurchase agreement (repos) to manage redemptions of investments in the program, subject to the condition that the repos in question are unwound no later than three business days after they are entered into and continued compliance with the conditions set forth in CFTC Interpretative Letter No. 96-78. The repos would be entered into by the program managers only if that was considered to be an economically superior alternative to selling securities outright and only to fund liquidity needs so that participating clearing members can satisfy settlement variation requirements in cash.

98-06 ; Rule 4.7(a); Exemption
The Division of Trading and Markets declined to reconsider a denial of relief it previously had issued to a registered CPO who had requested that an employee be treated as a QEP for the purpose of the CPO claiming relief under Rule 4.7(a). The Division based its position upon the representations that the employee maintains no significant securities investments or sufficient margin or option premiums on deposit with a futures commission merchant, has a minimal net worth at the present time, has an annual salary of only one half the amount required by the QEP standard and is relatively inexperienced in the securities industry.

98-07 ; Section la(5) and 4k(3) of the Act - Registration Requirements for Entity Which Proposes to Start a Business Advising Farmers How to Hedge by Trading Futures; Interpretation
The Division of Trading & Markets provided interpretative advice to an entity that is seeking to start a business advising farmers "how to hedge, through trends and using futures." The entity advertises that its services are "designed for you and your farm." The entity purposes to provide its services to clients through the use of facsimiles, seminars and face-to-face interviews. The entity claims that it will not engage in any trading itself, nor recommend specific trades, nor refer clients to specific entities or individuals for the purpose of obtaining trading advice or other services. The Division advised the entity that it is required to register as a commodity trading advisor because the registration requirements are triggered not only when specific transactions are recommended but also when, as here, advice is given as the value or advisability of trading in futures or options. The Division also advised the entity that since the entity's employees responsible for soliciting clients will have not discretionary authority over any commodity interest trading accounts, these individuals will not have to register as APs.

98-10 ; Rule 4.7(a) - Exemptive Relief for CPOs; Exemption
The Division of Trading & Markets provided exemptive relief to an applicant for registration as a CPO that will trade commodity interest upon registration to permit it to accept the investments of several individuals who are not QEPs into two Rule 4.7 commodity pools operated by CPO. Two of the prospective investors are portfolio managers employed by a firm affiliated with the CPO by common ownership. The remaining two prospective investors include accounts established for the benefit of the children of the Chairman and CEO of the CPO and trusts established for the benefit of these children. The Division granted the relief subject to the condition that each of the non-QEP consent in writing to being treated as QEP.

98-11 ; Rule 4.7(a); Exemption
The Division denied the request of a registered CPO of a Rule 4.7(a) Exempt Pool to treat an individual participant as though he satisfied the QEP criteria of Rule 4.7(a). The Division stated that the participant's portfolio and net worth or annual income amounts fell short of the figures required by the rule. In addition, the Division was not presented with any other facts or circumstances that would support the CPO's request to treat the participant as though he satisfied the QEP criteria of the rule.

98-14 ; Rule 4.7(a) - Exemptive Relief for CPO; Exemption
The Division of Trading & Markets confirmed an exemption from the requirements of Rules 4.21, 4.22(a) and (b), 4.25, and 4.26 that was previously granted to a registered CPO despite a change in the ownership composition of a pool operated by the CPO and granted an exemption to the CPO to permit the participants in a pool, some of whom do not meet the QEP criteria, to allocate a portion of their investments to a second Rule 4.7 pool operated by the CPO. The first pool was formed as a trading vehicle for the principals and employees of the CPO and its affiliates. The CPO was seeking to allow one limited partner to transfer her interest to her husband and to allow two other limited partners, one former employee and the spouse of another former employee, to maintain their investments. With respect to the second pool, the relief was granted based upon representations that all of the participants were involved in the trading or management of the pool or were related to someone who was so involved.

98-15 ; Rule 4.7(a) - Exemptive Relief for CPOs; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investment of a non-QEP into a Rule 4.7 commodity pool operated by the CPO and for relief from the ten percent investment limitation of Rule 4.7(a)(1)(ii)(B)(2)(xi). The investor, a computer analyst for the CPO, implements analytical trading models for the pool. The relief was granting based upon representations that the non-QEP consent to being treated as a QEP and be given access to the books and records of the pool.

98-16 ; Rule 4.7(a) - Exemptive Relief for CPOs; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investment of a non-QEP into a Rule 4.7 commodity pool operated by the CPO and for relief from the ten percent investment limitation of Rule 4.7(a)(1)(ii)(B)(2)(xi). The investor, a computer analyst for the CTA of the pool, implements analytical trading models for the pool. The relief was granting based upon representations that the non-QEP consent to being treated as a QEP and be given access to the books and records of the pool.

98-17 ; Rule 166.4; Exemption
The Division of Trading and Markets denied the request of a registered CTA for relief from the requirement that it list the home workplace of an AP as a branch office. The CTA represented that the AP did not solicit customer accounts, open customer accounts, participate in the implementation of the CTA's discretionary trading system, or place orders for execution from his home. The CTA further represented that the individual was registered as an AP solely to permit him to: 1) assume responsibility for trading discretionary accounts in the event the other principals of the CTA became incapacitated; 2) respond to requests for instructions on how to open discretionary trading accounts and for information on the performance of CTA's trading systems in the event such inquiries arose while the AP was conducting seminars or being interviewed by the media; and 3) respond to customer inquiries regarding the mechanics of the CTA's trading systems when forwarded to his home. The Division stated that the AP's status as a registered AP was the controlling factor in determining the applicability of the branch office requirement to his home, not the nature of the business activities he conducts there. The AP could not have the imprimatur of registration without fulfilling the duties attendant to such registration. Accordingly, the CTA must list the AP's home as a branch office.

98-18 ; Section 4m(1) - CPO and CTA registration requirements; Other Written Communication
The Division of Trading and Markets denied a request for relief from CPO and CTA registration by certain persons who were registered as CPOs and CTAs. The request was based upon, among other things, the low level of commodity interest trading in which the requesters had engaged on behalf of the pools they operated and advised. The Division took the position that notice and comment rulemaking is the appropriate means to evaluate whether an exclusion from CPO and CTA registration for CPOs and CTAs whose commodity interest trading commodity interest advisory activities are de minimis would be consistent with the Act and the public interest. The requesters were invited to file a petition for rulemaking.

98-19 ; Section 4m(1) - CPO and CTA registration requirements; Other Written Communication
The Division of Trading and Markets denied a request for relief from CPO and CTA registration by certain affiliated persons involved in the operation and advising of a securities investment partnership where the request was based on representations that the amount of assets used by the partnership for commodity interest trading would not exceed 2%, and that commodity interest trading would not be speculative. CPO registration relief had been sought for the general partner of the partnership and for the directors of the company that was the sole limited partner of the partnership. CTA relief had been sought for the investment adviser of the partnership. The Division took the position that notice and comment rulemaking is the appropriate means to evaluate whether an exclusion from CPO and CTA registration for CPOs and CTAs whose commodity interest trading and commodity interest advisory activities are de minimis would be consistent with the Act and the public interest. The requester were invited to file a petition for rulemaking.

98-20 ; Section 4m(1), Rule 4.7(a), Rule 4.7(a); No-Action; Exemption
The Division of Trading and Markets took a "no-action" position with respect to the failure of the general partner of a commodity pool to register as a CPO where an affiliated registered CPO conducted all of the pool's CPO functions and the affiliated CPO acknowledged joint and several liability with the pool's general partner for any violation of the Act or Commission rules. The Division also granted the affiliated CPO an exemption permitting it to treat as a QEP a trust for the benefit of the mother of a QEP participant in the pool, where the trust and the beneficiary were both accredited investors, the beneficiary's son was also the trustee of the trust and the trust's investment in the pool would represent no more than 15% of the beneficiary's net assets. Finally, the Division took the position that notice and comment rulemaking is the appropriate means to evaluate whether persons who are "knowledgeable employees," as defined by Investment Company Act Rule 3c-5, may be treated as QEPs without meeting the specific criteria in Commission Rule 4.7(a). The Division invited the requesters to file a petition for rulemaking and stated that in the interim requests would be considered on a case-by-case basis.

98-21 ; Rule 4.31; Exemption
The Division of Trading and Markets denied the request of a CTA to be exempt from the Disclosure Document delivery requirement of Rule 4.31 in connection with its provision of commodity interest trading advice to non-U.S. persons. The Division based the denial on the facts that: (1) A, who was a 50% co-owner, the sole director and the sole officer of the CTA and the sole person who would make trading decisions on behalf of the CTA, was also registered as a CTA in his individual capacity; (2) A had current Disclosure Documents; (3) A had several hundred discretionary account clients and tens of millions of dollars under management; and 4) the CTA planned to use the same trading programs as A.

98-22 ; Rule 166.4 - Interpretative Advice for IB Operating as Branch Offices of Another IB; Interpretation
The Division of Trading and Markets (T&M) provided interpretative advice to an IB (IBl) that was no longer operating as an IB and was instead functioning as branch offices of another IB (IB2). IBl wanted to use its own name in conjunction with the name of IB2. IBl was functioning as branch offices of IB2 because IBl had lost its guarantor and could not meet the minimum capital requirements for operating as an independent IB. In interpreting the purposes and policies of the separate registration categories set forth in the Commodity Exchange Act and Rule 166.4, T&M determined that IBl was prohibited from using both names and from operating as separately incorporated branch offices of IB2. According to T&M, IBl had chosen to forego its separate IB identity in operating as branch offices of IB2. IBl, therefore, was required to forego its separate incorporation and registration status. In addition, all branch offices which the personnel of IBl were operating on behalf of IB2 must be exclusively identified for all purposes, including in all promotional and disclosure documents, as branch offices of IB2 - without reference to IBl.

98-23 ; Rule 4.7(a)(2)(iv) and 4.7(b)(2)(ii); Exemption
The Division of Trading and Markets provided exemptive relief, subject to certain conditions, to a registered CPO/CTA from the books and records location requirement of Rules 4.7(a)(2)(iv) and 4.7(b)(2)(ii) to permit the registered CPO/CTA to maintain the books and records for its Rule. 4.7 Accounts at the office of its parent company in New York. In providing the requested relief, the Division noted that the Commission maintained its rights under Rule 1.31 to inspect the CPO/CTA's required books and records either at its main business office or at the office of its parent company.

98-24 ; Rule 4.21; Exemption
The Division of Trading and Markets (Division) granted an exemption from Rule 4.21 to the CPO and general partner of a commodity pool "master" fund with respect to delivering a Disclosure Document to participants in the master fund. These participants were commodity pool "feeder" funds of which the CPO and general partner were also the CPO and general partner of the master fund.

98-25 ; 4m(l); No-Action
The Division of Trading and Markets denied a request for relief from the commodity pool operator registration requirement of Section 4m(1) of the Act by a general partner of two securities investment limited partnerships where the request was based on representations that the amount used by the partnerships for commodity interest trading would not exceed 2% of the fair market value of the partnership's assets, that all commodity interest trading would be for bona fide hedging purposes, and that any commodity interest trading would be solely incidental to the securities trading of the partnership. The Division stated that there currently is no exception to the obligation to register as a commodity pool operator based on the fact that a partnership makes only de minimis investments in commodity interests and took the position that the notice and comment rulemaking process, rather than a request for a no-action position, is the appropriate method by which to evaluate whether such an exception would be consistent with the Act and in the public interest. The requestor was invited to file a petition for rulemaking.

98-26 ; 4m(l); No-Action
The Division of Trading and Markets denied a request for relief from the commodity pool operator registration requirement of Section 4m(1) of the Act by the managing member of a limited liability company (LLC) where the request was based primarily on the representation that the amount of the LLC' s cash reserves used by the LLC for commodity interest trading would be modest. The Division stated that there currently is no exception to the obligation to register as a commodity pool operator based on the fact that a partnership makes only de minim investments, in commodity interests and took the position that the notice and comment rulemaking process, rather than a request for a no-action, is the appropriate method by which to evaluate whether such an exception would be consistent with the Act and in the public interest. The requestor was invited to file a petition for rulemaking.

98-27 ; Rule 4.33; Exemption
The Division of Trading and Markets exempted a CTA from the requirement in Rule 4.3 3 that the CTA maintain its books and records at its main business office and permitted it to maintain its books and records at the office of its immediate parent, where the books and records of the parent corporation and its nine subsidiaries are kept. The exemption was granted subject to several conditions, including that the CTA remain responsible for ensuring that all books and records required by Rule 4.33 are maintained in accordance with Rule 1.31 and for assuring their availability to the Commission, the National Futures Association and any other agency authorized to review them.

98-28 ; Rule 4.7(a) - Request for Confirmation of Exemptive Relief from the Ten Percent Limitation on Investments in Exempt Pools; Exemption
The Division of Trading and Markets confirmed exemptive relief from the ten percent investment limitation of Rule 4.7 (a) (1) (ii) (B) (2) (xi) that was previously granted to a CPO if a new entity becomes the general partner and two additional entities are admitted as limited partners in the exempt pool. The new general partner and one of the limited partners would be wholly owned by the CPO and managed by an officer of the CPO. The other limited partner would be owned by the CPO and three family trusts and would have assets in excess of $10 million. The previous life was confirmed based, among other things, on representations that all three entities would be qualified eligible participants.

98-29 ; Rules 3.1, 4.36; No-Action
The Division of Trading and Markets denied the request of a CTA for no-action relief from listing sixteen of its employees as principals or for relief from amending its Disclosure Document each time a personnel change occurs with regard to one of its employees who qualifies as a principal. The Division noted that under the current Commission rules, it was unable to grant the CTA's request and further stated that the appropriate procedure for addressing the issues raised by its request would be through notice and comment rulemaking. The Division advised the CTA that it may recommend that the Commission initiate a rulemaking in the near future to address which employees in organizations like the CTA's should be considered "principals" for listing purposes.

98-30 ; Rules 4.23 and 4.33; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO and CTA from the books and records location requirements of Rules 4.23 and 4.33 such that the CPO/CTA may maintain its books and records at the main business office of an affiliated company that will act as the administrator of the CPO/CTA would be subject to inspection pursuant to Rule 1.31 at the administrator's main office in accordance with all the provisions of Rule 1.31; and, furthermore, that the administrator agreed to provide access to such books and records pursuant to the guidelines set forth in Rule 1.31 upon the request of an authorized representative of the Commission or any other agency authorized to review such books and records.

98-32 ; Request for Exemptive Relief from Rules 4.21, 4.22(a) and (b), 4.25, and 4.26; Exemption
The Division of Trading and Markets confirmed an exemption from the requirements of Rules 4.21, 4.22(a) and (b) , 4.25 and 4.26 that was previously given to a registered CPO notwithstanding the addition of certain additional participants in a pool operated by the CPO, where, among other things, each of participants: (1) is an investment manager for an entity affiliated with the CPO that serves as the co-investment manager of the pool; (2) consents to the pool's operation pursuant to exemptive relief; and (3) is given access to the books and records of the pool.

98-33 ; Rule 4d(l) of the Act - No-action Position Concerning Receipt of Finder's Fees by Unregistered IB; No-Action
The Division of Trading and Markets issued a no-action position to an unregistered IB and its sole principal to enable the IB to continue to receive finder's fees from a CTA to whom the IB had introduced clients when it was registered as an IB. The IB was no longer acting as an IB and its sole business activities was limited to accepting fees from its former CTA-clients. The principal was registered as an AP of one of these former CTA-clients. The Division previously had permitted the unregistered IB and its principal to receive these fees for a period of two years. The IB requested a continuation of this position for an additional one year. The no-action position was issued on condition that the IB's principal continue to be registered during the period the IB receives fees, the IB continue to comply with the previous letter granting no-action relief, and all fees would cease to be paid to the IB after the additional year.

98-34 ; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief under Rule 4.7(a) to a registered CPO, notwithstanding the presence of non-QEPs in its pools, where the non-QEPs are employees of the CPO and/or the parent corporation of the CPO. The non-QEPs are either directors, officers or traders for the CPO or the parent corporation. These non-QEPs relief have ready access to information pertinent to an investment in the pool and agree to being treated as QEPs. However, relief was denied to several other non-QEP individuals that are either parents, in-laws or spouses of the non-QEP employees being admitted by this letter.

98-35 ; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investments of three persons who were not qualified eligible participants (the "Non-QEPs") into a Rule 4.7(a) commodity pool (the "Fund") operated by the CPO. The three Non-QEPs were employed by either the CPO or its affiliate, qualified as accredited investors, had substantial experience in the financial services industry and had access to books and records pertinent to an investment in the Fund.

98-36 ; Rule 4.33; Exemption
The Division of Trading and Markets exempted a CTA from the requirement in Rule 4.33 that the CTA maintain its books and records at its main business office and permitted it to maintain its books and records at its branch office where all of the administrative functions of the CTA will be performed. The exemption was granted subject to several conditions, including that the CTA remain responsible for ensuring that all books and records required by Rule 4.33 are maintained in accordance with Rule 1.31 and for assuring their availability to the Commission, the National Futures Association and any other authorized to review them.

98-37 ; Rule 4.7(a)(1)(ii)(B)(2)(xi) - Exemptive Relief for CPO; Exemption
The Division of Trading & Markets provided exemptive relief to a registered CPO to permit it to accept an investment of more than ten percent of the fair market value of the assets of a trust into a Rule 4.7 exempt pool operated by the CPO. The trust was established by and for a husband and wife for estate planning purposes. Although the trust is a QEP, only one of its beneficiaries, the husband, is a QEP. Therefore, pursuant to Rule 4.7 (a) (1) (ii) (B) (2) (xi) , and absent the relief that was provided, the CPO could not accept more than ten percent of the fair value of the trust's assets to purchase units in the pool. The relief was based, among other things, on the fact that the settlors of the trust (the husband and wife) would consent to the trust's operating pursuant to the waiver.

98-38 ; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to permit a registered CPO to treat the four adult children of the sole owner, Chairman and CEO of the CPO as if they satisfy the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The non-QEPs' individual interests in the pool are exclusively comprised of monetary gifts from the owner of the CPO, who is himself a QEP. In addition, the non-QEPs will consent in writing to being treated as QEPs and will have access to the books and records relevant to an investment in the pool.

98-39 ; Rule 4.7(a); Exemption
The Division of Trading and Markets denied a request for exemptive relief to permit the registered CPO of Rule 4.7(a) exempt pool to treat a prospective investor as if he satisfies the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The Division based its decision upon: (1) the size of the non-QEP's investment portfolio relative to that required by Commission rules for QEP treatment and (2) the lack of any relationship between the non-QEP and the CPO or the Pool.

98-40 ; Rule 4.7(a); Exemption
The Division of Trading and Markets denied a request for exemptive relief to permit the registered CPO of a Rule 4.7(a) exempt pool to treat an employee of the CPO as if he satisfies the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The Division based its decision upon the facts that the non-QEP: (1) has been employed by the CPO for less than two years; (2) has no other employment or professional experience in the financial services industry; and (3) substantially lacks the financial resource required of a QEP under Rule 4.7.

98-41 ; Section 2(a); No-Action
No-action letter allowing the OM Stockholm AB futures contract based on the OMX Stock Index to be offered or sold in the United States.

98-42 ; 4(a), 4(b), and 5 of the Commodity Exchange Act; No-Action
The Division of Trading and Markets (Division) issued a follow-up letter to the Deutsche Terminbosre (DTB) regarding the status of the Division's February 29, 1996, no-action letter permitting the placement of DTB computer terminals in the U.S. This new letter was issued in light of the pending merger between the DTB and the Swiss Options and Financial Futures Exchange (SOFFEX) to create a futures exchange organization called Eurex. The Division confirmed that eleven firms pending DTB membership, which were identified by the DTB to the Division, will be eligible to rely on the 1996 no-action position with respect to DTB terminal placement once they become DTB members and otherwise satisfy the conditions set forth in the 1996 letter. Other new DTB members, including current or future SOFFEX members, are not eligible to take advantage of the 1996 no-action position with respect to DTB terminal placement unless they receive separate written approval from the Division. The Division also clarified that the 1996 letter by its terms applies only to the execution by DTB members of transactions involving DTB futures and options products, and it does not extend to SOFFEX products or to new DTB/Eurex products unless the DTB receives separate written approval from the Division.

98-46 ; Rules 4.23 and 4.33; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO and CTA from the books and records location requirements of Rule 4.23 and 4.3 3 such that the CPO/CTA may maintain its books and records at its branch office where it performs its back-office functions. The exemption was subject to several conditions, including that: (1) the CPO/CTA would remain responsible for ensuring that all books and records required by Rules 4.23 and 4.33 would be maintained in accordance with Rule 1.31; and (2) that the CPO/CTA would provide access to such books and records in accordance with Rule 1.31 upon the request of an authorized representative of the Commission or any other agency authorized to review such books and records.

98-47 ; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief under Rule 4.7(a)to a registered CPO, notwithstanding the presence of non-QEPs in its pool, where the non-QEPs are the parents of the sole owner, managing member, principal and registered associated person of the CPO. These non-QEPs have ready access to information pertinent to an investment in the pool and agree to being treated as QEPs.

98-48 ; Rule 4.7(a); Exemption
The Division of Trading and Markets (the Division) provided exemptive relief to a registered CPO to permit it to treat a trust as if it satisfies the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The Chairman of the Board of the CPO, who is a QEP, established the trust for estate planning and investment purposes and its sole beneficiary is his teenage son. The CPO will serve as the investment adviser to the trust and is responsible for making all investment decisions on behalf of the trust. The trustee of the trust provided a letter wherein he consented to the trust's treatment as a QEP and the CPO represented that its Chairman, on behalf of the CPO, would have access to information pertinent to an investment in the pool. In addition, the Division provided exemptive relief to the CPO to permit it to treat the trust as a QEP for the purpose of qualifying the pool itself as a QEP under Rule 4.7(a)(1)(ii)(D).

98-49 ; Rule 4.7(a) - Exemptive Relief for CPOs; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investments of certain non-QEPs into a commodity pool operated by the CPO and from the ten percent investment limitation or Rule 4.7 (a) (1) (ii) (B) (2) (xi) . The non-QEPs are portfolio managers or traders for a broker-dealer, futures commission merchant, and commodity trading advisor that provides securities brokerage services for the pool. The relief was granted based upon representations that the non-QEPs have ready access to all information pertinent to an investment in the pool and will consent to being treated as a QEP and to a waiver from the ten percent limitation for investment of the poolos assets in other exempt pools.

98-50 ; Rules 4.7(a)(2)(ii) and (a)(2)(iii); Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO (CPO X) from the periodic and annual reporting requirements of Rules 4.7(a)(2)(ii) and (a)(2)(iii) in connection with its operation of a master fund which has as its sole participants two feeder funds. CPO X serves as the CPO of one of the feeder funds and CPO Y serves as the CPO of the other feeder fund. Both CPOs share the same managing members. Thus, the Division reasoned that requiring CPO X to provide periodic and annual reports would, in the one instance, be requiring it to provide information to itself, and in the second instance, effectively be requiring it to provide information to itself since both CPOs have the same managing members.

98-51 ; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to treat and investor as if she satisfies the qualified eligible (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The Non-QEP: (1) is the wife of the individual who is the sole proprietor of the pool's CTA; (2) is the co-owner of a joint account that is an existing participant in the pool; (3) assisted her husband in establishing the CTA; (4) currently serves as the CTA's office manager, providing accounting, bookkeeping, employee benefits and general business advice; (5) qualifies as an accredited investor; and (6) is an attorney who has practiced corporate and real estate law for six years. In addition, the CPO represented that it would obtain the written consent of the Non-QEP to be treated as a QEP and that the Non-QEP would have access to all books and records pertinent to an investment in the pool.

98-52 ; Rule 4.7(a) - Exemptive Relief CPOs; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investments of certain non-QEPs into a commodity pool operated by the CPO and from the ten percent investment limitation of Rule 4.7(a) (1) (ii) (B) (2) (xi) . The non-QEPs are portfolio managers or traders for a broker-dealer, futures commission merchant, and commodity trading advisor that provides securities brokerage services for the pool. The pool is exempt from the disclosure requirements of Rule 4.7 based upon the CFTC's Advisory for Interpretative Letter Nos. 93-1 and 93-2. The Advisory had provided 4.7 relief for pools comprised of QEPs and non-QEPs that predated the adoption of Rule 4.7 and that agreed prospectively to admit only QEPs into those pools. The relief was granted based upon representations that the non-QEPs have ready access to all information pertinent to an investment in the pool and will consent to being treated as a QEP and to a waiver from the ten percent limitation for investment of the pool's assets in other exempt pools.

98-53 ; Rule 4.7(a); Exemption
The Division of Trading and Markets (the Division) provided exemptive relief to a registered CPO to permit it to treat three persons if they satisfy the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The Non-QEPs are registered associated persons of the CPO, qualify as accredited investors and have substantial experience in the financial services industry. The CPO represented that it would obtain the written consent of the Non-QEPs to be treated as QEPs and that they would have access to the books and records pertinent to an investment in the pool. In addition, the Division provided exemptive relief to the CPO to permit it to treat the Non-QEPs as QEPs for the purpose of qualifying the pool itself as a QEP under Rule 4.7(a) (1) (ii) (D) .

98-54 ; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to permit a registered CPO to treat two employees of the CPO as if they satisfy the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. Each non-QEP participant: 1) was an accredited investor; 2) had been employed by the CPO and its affiliate for at least five years, 3) had substantial experience in the financial services industry; 4) had access to the books and records pertinent to an investment in the pool; and 5) consented to being treated as a QEP.

98-55 ; Rule 4.7(a); Exemption
The Division of Trading and Markets (the Division) provided exemptive relief to a registered CPO to permit it to treat two persons as if they satisfy the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The Non-QEPs were employed by the CPO, qualified as a accredited investors, had substantial experience in the financial services industry and had access to books and records pertinent to an investment in the pool. In addition, the Division provided exemptive relief to the CPO to permit it to treat the Non-QEPs as QEPs for the purpose of qualifying the pool itself as a QEP under Rule 4.7 (a) (1) (ii) (D) .

98-56 ; Rule 4.7(a; Exemption
The Division of Trading and Markets confirmed that a registered CPO may rely on three prior letters from the Division of Trading and Markets granting certain relief from Rule 4.7(a) to two predecessor firms to the CPO. The Division of Trading and Markets also provided exemptive relief under Rule 4.7(a) to the CPO such that it may treat one of its non-QEP employees as a QEP. The non-QEP is a Vice President, heads the Trader Recruitment and Development Department, and designs portfolios for commodity pools managed by the CPO. The non-QEP has ready access to information pertinent to an investment in the pool and agreed to being treated as a QEP.

98-57 ; Section 4d of the Act; No-Action
The Division of Trading and Markets declined to take a no-action position as requested by an introducing broker (IB), concerning the ability of the IB to split commissions with grain elevators, based upon the futures and options trades placed by the grain elevators' customers, without the grain elevators first registering as IBs. The IB which made the request was wholly-owned by a farmers cooperative and the grain elevators in question, although separately incorporated entities, were members of the cooperative. The IB was willing to establish separate branch offices at the elevators and have at least one employee at each elevator register as an associated person of the IB. Nevertheless, the Division expressed concern about the ability of the IB properly to supervise futures-related activities at the proposed branch offices and concluded that it would not be an unwarranted hardship for each grain elevator to register as an IB.

98-58 ; Rules 4.7, 4.21, 4.22 and 4.23; No-Action; Exemption
The Division confirmed that a limited liability company that succeeded to the business of a corporation could claim the relief from certain Part 4 rules that the Division previously had issued to the corporation where, among other things, the management, personnel and trading strategies remained the same.

98-59 ; Rule 4.7(a); Exemption
The Division of Trading and Markets (the Division) provided exemptive relief to a registered CPO to permit it to treat a family trust (the Trust) as if it satisfies the qualified eligible participant (QEP) criteria of Rule 4.7(a) in connection with its operation of the pool. The Chairman of the Board of the CPO, who is a QEP, established the Trust for estate planning and investment purposes and its sole beneficiaries are his two teenage sons. The CPO will serve as the investment adviser to the Trust and is responsible for making all investment decisions on behalf of the Trust. The trustee of the Trust provided a letter wherein he consented to the Trust's treatment as a QEP and the CPO represented that its Chairman, on behalf of the CPO, would have access to information pertinent to an investment in the pool. In addition, the Division provided exemptive relief to the CPO to permit it to treat the Trust as a QEP for the purpose of qualifying the pool itself as a QEP under Rule 4.7 (a) (1) (ii) (D) .

98-60 ; Rule 4.7(a) - Exemptive Relief for CPO; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investment of a non-QEP into all existing and future domestic exempt pools operated by the CPO and from the ten percent investment limitation of Rule 4.7(a)(1)(ii)(B)(2)(xi). The non-QEP is a law partner who was, and, for the purpose of the relief requested, will be involved in the creation of every domestic exempt pool operated by the CPO since 1989. By virtue of this work, the non-QEP has or will have ready access to all information pertinent to an investment in the exempt pools. In addition, the non-QEP will consent to being treated as a QEP for purpose of his investments in the exempt pools and to a waiver from the ten percent limitation for investment of the pool's assets in other exempt pools.

98-61 ; Section 4(b); Other Written Communication
Denial of No-Action Relief - The Division of Trading and Markets (Division) determined not to issue a no-action letter to a limited liability company (LLC) that was seeking Deutsche Terminborse (DTB) membership in order to place DTB computer terminals in its offices after approval of its DTB membership but prior to the Commission's completion of its rulemaking process regarding the placement of foreign board of trade electronic trading systems in the U.S. The LLC had been formed for the purpose of carrying out the proprietary trading activities of a U.S. FCM (owned by the same persons that own the LLC) that is already a DTB member and currently uses DTB trading terminals in its offices. The Division noted that in light of the Commission's recent concept release concerning placement of foreign board of trade electronic trading systems in the U.S., the Division issued a letter to the DTB dated June 3, 1998, that was intended to maintain the status quo and to prevent new DTB members from using DTB terminals in the U.S. until the Commission further addresses these issues.

98-62 ; Section 4(b); Other Written Communication
Denial of No-Action Relief - The Division of Trading and Markets (Division) determined not to issue a no-action letter to a U.S. FCM that was seeking Deutsche Terminborse (DTB) membership in order to place DTB computer terminals in its offices after approval of its DTB membership but prior to the Commission's completion of its rulemaking process regarding the placement of foreign board of trade electronic systems in the U.S. The Division noted that in light of the Commission's recent concept release concerning the placement of such electronic trading systems in the U.S., the Division issued a letter to the DTB dated June 3, 1998, that was intended to maintain the status quo and to prevent new members of the DTB from using DTB terminals in the U.S. until the Commission further addresses these issues.

98-63 ; Rules 4.7(a), 4.21, 4.22, 4.23(a)(3), 4.23(a)(10), 4.23(a)(11); Exemption
The Division of Trading and Markets permitted a registered CPO to treat a non-QEP as a QEP. The non-QEP is a general partnership comprised solely of senior-level employees of the CPO, who have ready access to information pertinent to an investment in the pool. In addition, the Division provided exemptive relief from the CPO disclosure, reporting and recordkeeping requirements of Rules 4.21, 4.22, 4.23(a)(3), 4.23(a)(10) and 4.23(a)(11) to the managing general partner of the employee partnership, who also is registered CPO.

98-64; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief under Rule 4.7(a) to a registered CPO, notwithstanding the presence of non-QEPs in its pools, where the non-QEPs are employees of an affiliated company of the CPO. The non-QEPs are either directors, officers, traders or analysts for the affiliated company. The non-QEPs have ready access to information pertinent to an investment in the pool and agree to being treated as QEPs.

98-65 ; Rule 4.7(a); Exemption
The Division of Trading and Markets permitted two registered CPOs to treat certain non-QEPs as QEPs for the purpose of investing in Rule 4.7 exempt pools the CPOs operate. One of the non-QEPs was a registered AP, principal and CEO of the CPOs and the other non-QEP was a registered AP, principal and Director of Investor Relations of the CPOs. This exemption was subject to the condition that the non-QEPs will have access to the books and records pertinent to an investment in the pools.

98-66 ; Section 4m(1) - CPO and CTA registration requirements; Other Written Communication
The Division of Trading and Markets had previously denied a request for relief from CPO and CTA registration by certain affiliated persons involved in the operation and advising of a securities investment partnership where the request was based on representations that the amount of assets used by the partnership for commodity interest trading would not exceed 2%, and that commodity interest trading would not be speculative. The Division denied the requester's subsequent request for interim relief pending formal rulemaking by the Commission regarding an NFA-proposed registration exemption for operators of pools that limit their commodity interest trading to a specified minimal level.

98-67 ; Rule 4.7(a); Exemption
The Division of Trading and Markets permitted a registered CPO to treat two non-QEP employees as QEPs. The non-QEPs are a senior-level director and an officer of the CPO who perform as the Chief Financial Officer and Director of Research for the CPO and who have ready access to information pertinent to an investment in the pools. In addition, the Division permitted the CPO to treat the non-QEP employees as QEPs for the purpose of investing in any other pool which the CPO currently operates or advises and continues to operate or advise in the future. These exemptions are, however, subject to the condition that at the time a non-QEP employee seeks to invest in another pool, he or she must be employed by the CPO in a position that is the same or substantially the same as that which he or she currently holds.

98-68 ; 4m(l); No-Action
The Division of Trading and Markets denied a request for relief from the commodity pool operator registration requirement of Section 4m(1) of the Act by the managing member and the solicitor of two securities investment limited liability companies where the request was based on representations that the amount used by the companies for commodity interest trading would not exceed 5% of the fair market value of the companies' assets. The Division stated that there currently is no exception to the obligation to register as a commodity pool operator based on the fact that a fund makes only de minimis investments in commodity interests and took the position that the notice and comment rulemaking process, rather than a request for a no-action position, is the appropriate method by which to evaluate whether such an exception would be consistent with the Act and in the public interest. The requestor was invited to file a petition for rulemaking. In addition, the requestor was reminded of the commodity pool operator registration requirement for any personal operating any investment trust, syndicate or similar form of enterprise for the purpose of trading commodity interests.

98-69 ; Rule 4.7(a) - Exemptive Reliefs for CPOs; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investments of two individuals who are not QEPs into a Rule 4.7 commodity pool to be organized by the CPO. The two individuals each own a one-third interest in the CPO and are officers, registered APs and listed principals of the CPO. The relief was granted based upon representations that the non-QEPs will consent to being treated as QEPs for purposes of investing in the pool and have or will be provided with access to all information pertinent to an investment in the pool.

98-70 ; Section 4(b); Other Written Communication
The Division of Trading and Markets (Division) issued a letter to Eurex Deutschland (formerly the Deutsche Terminborse and referred to herein and in the letter as DTB) concerning an upcoming DTB rule change that would allow the use of order routing systems (including from U.S. locations) to enter orders on the DTB. The Division noted that in light of the Commission's recent concept release concerning the placement of foreign board of trade electronic trading systems in the U.S., the Division issued a letter to the DTB dated June 3, 1998 that was intended to maintain the status quo with respect to DTB's operations and trading in the U.S. The Division stated its view that a rule change permitting the use of order routing systems in the U.S. would upset the status quo and requested that the DTB issue a letter to its members and sales force stating that its current rules concerning order entry shall remain in effect as to customers and other DTB traders in the U.S. until the Commission further addresses the issue.

98-71 ; Section 4(b); Other Written Communication
In light of the Commission's recent concept release concerning foreign board of trade computer terminal placement in the U.S., the Division of Trading and Markets (Division) declined to issue a no-action position to an FCM concerning customer use of order entry systems (OES) to purchase products on a foreign board of trade. The FCM had requested that the Division not recommend enforcement action to the Commission if the FCM or its affiliates provided access to order entry systems to certain of the FCM's customers where the OES would be located outside the U.S. The Division stated its belief that it is not appropriate for it to formulate policies concerning OES use via issuance of no-action letters, but rather it intends to address these issues in conjunction with the Commission's ongoing rulemaking process regarding electronic access to foreign boards of trade.

98-72 ; Section 4d of the Act; No-Action
The Division of Trading and Markets declined to reconsider its denial of a no-action request by an introducing broker (IB) that the IB be allowed to split commissions with grain elevators, based upon the futures and options trades placed by the grain elevators' customers, without the grain elevators first registering as IBs. The requesting IB had indicated that it would register as APs any employee of a grain elevator who handled any customer's futures or options trades. The Division cited concerns about the requesting IB's ability to supervise potential associated persons who were operating away from the IB's principal place of business and who would not be employees of the IB in declining to reconsider its previous position on this request.

98-73 ; Section 4d of Act; No-Action
The Division of Trading and Markets declined a request for a no-action position with respect to future commission merchant (FCM) registration requirements from a party who intended to buy and sell gold bars with members of the public. The Division stated that the transactions in question may implicate more than the FCM registration requirements and could be subject to the exchange-trading requirements of the Act as well as to other provisions governing the offer or sale of futures contracts to members of the public.

98-74 ; Rule 4.7; Exemption
CPO permitted to treat a non-QEP trust as a QEP based upon, among others, representations that the trustee and beneficiary of the trust was the Chairman of the Board of Directors, and a co-founder and principal, of the CPO.

98-75 ; Rule 4.7(a); Exemption
The Division of Trading and Markets denied a request from a registered CPO to treat several non-QEP trusts as QEPs. The non-QEP trusts did not possess total assets of the requisite $5 million dollars as required under Rule 4.7(a)(1)(ii)(D).

98-76 ; Section 4m(l) & 4d(l); No-Action
The Division of Trading and Markets declined a request for a no-action position with respect to introducing broker (IB) and commodity trading advisor (CTA) registration requirements from a firm that intended to offer a service that would refer members of the public seeking to trade commodity interest products to registered associated persons of CFTC registrants. The Division stated that the firm, through its operation of the referral service, would be soliciting for compensation since its ultimate goal is to introduce members of the public to CFTC registrants for the purpose of instituting a trading relationship.

98-77 ; Rule 4.7(a); Exemption
The Division of Trading and Markets denied a request from a registered CPO to treat several non-QEP trusts as QEPs. The non-QEP trusts did not possess total assets in excess of the requisite $5 million dollars as required under Rule 4.7(a)(1)(ii)(B)(2)(xi).

98-78 ; Rule 4.7(a) - Exemptive Relief for CPO; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO to permit it to accept the investment of an individual who is not a QEP into a Rule 4.7 commodity pool operated by it and to invest more than ten percent of the pool's assets in other Rule 4.7(a) exempt pools, notwithstanding the participation of the non-QEP investor. The individual, a registered AP with more than ten years of experience in the financial services industry, is a senior portfolio manager for the CPO responsible for designing and managing the investment program of the pool. The relief was granted based upon representations that the non-QEP had consented in writing to being treated as a QEP for the purposes of Rule 4.7 and has direct access to all information pertinent to an investment in the pool.

98-79 ; 4m(l); Exemption
The Division of Trading and Markets denied a request for relief from the commodity pool operator and commodity trading advisor registration requirements of Section 4m(1) of the Act by, respectively, the general partner and the investment manager of a limited partnership where the request was based upon, among others, representations that the amount of the partnership's net assets to be used for commodity interest trading would be minimal. The Division stated that there currently is no exception to the obligation to register as a commodity pool operator or commodity trading advisor based on the fact that a partnership makes only de minimis investments in commodity interests and took the position that the notice and comment rulemaking process, rather than a request for a no-action position, is the appropriate method by which to evaluate whether such an exception would be consistent with the Act and the public interest. The requestor was invited to file a petition for rulemaking.

98-80 ; 4m(l); Rule 4.13; Interpretation
the Division confirmed that a director of an offshore fund need not register as a commodity pool operator based upon, among others, representations that the director: (1) although a United States citizen, maintained his permanent residence in Greece; and (2) would not solicit pool participants from within the United States. The Division exempted the registered commodity trading advisor of the fund from the requirement to deliver a Disclosure Document to the fund based upon representations that the advisor: (1) was wholly-owned by one of the three directors of the fund; and (2) had no United States persons as clients.

98-81 ; Rules 4.7(a); Exemption
The Division of Trading and Markets declined to take a position regarding a request from a registered CPO ("CPO X") to treat several non-QEP investors in its pool as QEPs. The pool operated by CPO X invested in a master fund operated by a separate and unrelated CPO ("CPO Y") that had filed a Rule 4.7(a) notice of exemption on behalf of the master fund. CPO X sought relief in order that its pool could maintain its investment in the master fund operated by CPO Y. However, CPO X had not filed a notice of exemption pursuant to Rule 4.7(a) on behalf of the pool, and furthermore, the pool did not possess total assets in excess of requisite $5 million dollars as required under Rule 4.7(a)(1)(ii)(B)(2)(xi). The Division informed CPO X that it was not the appropriate person to request such an exemption in this situation since it did not operate the Rule 4.7(a) exempt pool.

98-82 ; Rule 4.7; Exemption
A registered CPO was permitted to treat certain Non-QEPs as QEPs where, among other things, each of the Non-QEPs was an accredited investor and a managing director of the CPO or a director of a securities trading group of the CPO.

98-83 ; Rule 4.7; Exemption
A registered CPO previously was permitted to file a Rule 4.7 Notice of Claim for Exemption where its pool had two classes of shares - Class A, owned by Non-QEPs, and Class B, owned by QEPs - based upon representations that the Class A shareholders would continue to receive the full protections of Part 4. By this letter the CPO was permitted to have the pool invest without restriction on the amount of investment in other Rule 4.7 exempt pools operated by the CPO, based again on representations that (inasmuch as the CPO of the investor and investee pools would be the same person) the Class A, Non-QEP shareholders would continue to receive the full protections of Part 4.

99-01 ; Rule 1.57 (a); Interpretation
The Division of Trading and Markets (Division) expressed its view that, if an entity is registered as both a guaranteed introducing broker (IBG) and a commodity pool operator (CPO) and clearly separates its activities such that, when it is performing CPO functions, it is not also acting as an introducing broker, then the restriction of Commission Rule 1.57(a) would not apply with respect to a pool account. Rule 1.57(a) requires generally that an IBG introduce all customer accounts to its guarantor futures commission merchant on a fully-disclosed basis.

99-02 ; Section 4d of the Act; Interpretation
The Division of Trading and Markets (Division) affirmed its previous interpretation that a party who refers potential customers either directly or by providing lists of names to a Commission registrant in return for direct or indirect compensation must register as an introducing broker (IB). The Division also confirmed that the IB registration requirements could apply to persons who sponsor futures related seminars that are attended by associated persons (APs) of Commission registrants and stated that permitting registrants to send APs to seminar for a fee in order to solicit other attendees may itself constitute a referral by a seminar sponsor.

99-03 ; Rule 4.7; Exemption
The Division permitted a registered CPO to treat three employees as QEPs for the purpose of participating in a Rule 4.7 exempt pool the CPO operated, where, among other things, each employee: (1) was a senior officer of the CPO; (2) had been employed in the financial services industry for many years; and (3) was an "accredited investor" under Regulation D of the Securities Act of 1933.

99-04 ; Rule 4.14(a)(8); No-Action
The Division confirmed a prior no-action position it had issued to a registered investment adviser, such that the adviser could continue to claim an exemption from CTA registration under Rule 4.14(a)(8), notwithstanding the fact that it could not meet all of the criteria of the rule because it was operating a pool for key, senior employees pursuant to Rule 4.13(a)(1).

99-06 ; Rule 4.10 (d), Rules 4.21 and 4.22; Exemption; Other Written Communication
The Division of Trading and Markets denied a request for an interpretation that the definition of "pool" in Rule 4.10(d) did not apply to certain investee pools operated by two affiliated registered CPOs solely for the purpose of facilitating the trading of investor pools operated by the same CPOs. The Division exempted the CPOs from the disclosure and reporting requirements of Rules 4.21 and 4.22 with respect to the operation of the investee pools because the CPOs would otherwise be required to deliver Disclosure Documents and periodic reports to themselves.

99-08 ; Regulation 30.4; No-Action
The Division of Trading and Markets (Division) issued a no-action position to a foreign firm with a U.S. branch regarding its clearing activities for an electronic foreign exchange with terminals located in the United States. The firm requested the Division to confirm that it would not recommend an enforcement action against the firm for failing to register as an FCM or to obtain confirmation of Rule 30.10 relief if the firm cleared the proprietary trades of exchange members who were not FCMs, as well as trades placed by FCMs for their own account and on behalf of United States foreign futures and foreign options customers. The Division confirmed a no-action position with regard to clearing the trades for FCM customer omnibus accounts in accordance with prior interpretative letters. The Division also declined to address the issue of clearing proprietary trades of registered FCMs. In addition, the Division declined to issue a no-action position with regard to clearing trades for non-FCM exchange members' proprietary accounts.