No-Action Letters

02-07 ; Section 4m(1) of the Act; Rule 4.13(a)(1)(i); No-Action
The Division of Trading and Markets provided CPO registration no-action relief and confirmed the availability of CTA registration relief under section 4m(1) to an operator and the adviser, respectively, of a family fund. In so doing, the Division determined that one of the operators could not claim exemption from CPO registration under Rule 4.13(a)(1) because she received compensation as a principal of the fund's CTA.

02-08 ; Section 4m(1); No-Action
The Division of Trading and Markets issued a no-action position concerning CTA registration to a producer of live video and audio signals over the Internet who proposed to contract with each of several designated contract markets to provide, for a fee, unedited live video and audio coverage of the trading action on the floor of the contract market, accompanied by only generic factual commentary.

02-100 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight issued a CTA registration no-action position where the sole client was a commodity pool (the Fund) operated by a registered CPO and all of the participants in the Fund where the officers of the CPO: (1) had a minimum of three years experience at the CPO; (2) had a least five years of experience in trading commodity interests; and (3) were QEPs. The relief is subject to the conditions that the CPO remains: (1) the managing member and CPO of the Fund, and (2) registered as a CPO.

02-103 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight issued a CPO registration no-action position to certain Market Maker firms whose sole commodity interest trading would be in security futures products, on a proprietary basis. This position was based upon, among others, representations that each firm: was registered as a broker/dealer with the SEC; was a member of a national securities exchange; was comprised of specified persons; and was not subject to a statutory disqualification under the CEAct. The Division issued a CTA registration no-action position to the Traders of these firms based upon similar representations. To obtain this relief, however, a Market Maker must file a Claim with the Commission which, among other things, permits the Commission to inspect the Market Maker's books and records to confirm the availability of the relief and requires the Market Maker to annually update the Claim.

02-106 ; Rule 30.4(a) and (b); No-Action
The Division of Clearing and Intermediary Oversight issued a letter granting no-action relief in the case of a foreign bank's affiliate that has been granted an exemption from registration as a futures commission merchant pursuant to Commission Rule 30.10. The relief permits the employees of a U.S. branch of the foreign bank to refer bank customers located in the U.S., on an unsolicited basis, to the bank affiliate with the Rule 30.10 exemption for purposes of engaging in foreign futures and options trading, without the foreign bank or the U.S. branch having to register with the Commission as a futures commission merchant or introducing broker.

02-113 ; Rule 4.7; No-Action
The Division of Clearing and Intermediary Oversight took a no-action position further expanding the class of persons eligible to participate in certain investment funds operated by a registered FCM and broker-dealer as an incentive for the FCM/Broker-dealer's partners and senior management employees. The Division had previously permitted non-QEP managing directors and limited partners to participate, and the instant no-action position confirmed the prior relief while permitting additional classes of accredited investor employees and consultants of the FCM/Broker-dealer and their family members to participate. Each participant's investment could be no more than 15 percent of salary for the pervious year. Each investment fund would commit no more than 10 percent of its assets to commodity interest trading. All financial reports required by Rule 4.7 would be provided to participants and the relief was conditioned upon each eligible participant having reasonable access to the fund's books and records, with the opportunity to ask questions and receive answers concerning the fund's operation and investments.

02-114 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took a CTA registration no-action position with respect to a firm that sought to recommend investments for commodity interest accounts. The position was based, among other things, on the fact that in connection with the firm's registration as an introducing broker, each of its principals were listed as such and each of its associated persons were registered as such with the Commission, and the fact that the accounts and the investors in the accounts would all be QEPs.

02-115 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to a registered investment adviser in connection with providing investment management services to a Canadian non-contributory pension plan established by a Canadian corporation for the benefit of its employees and subject to the requirements of the Ontario Pension Benefits Act.

02-21 ; Section 4m(1) of the CEA; No-Action
The Division of Trading and Markets took a CPO registration no-action position with respect to two of three general partners of a commodity pool organized as a limited partnership where, among other things: (1) the other general partner was registered as a CPO and served as the managing general partner; (2) the no-actioned general partners were not subject to a statutory disqualification and their members were listed as principals of the registered CPO; and (3) the general partners agreed to joint and several liability for their CPO activities.

02-24 ; Sections 5 and 5a of the Act; No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit the Bourse de Montreal, Inc., to make its electronic trading and order matching system, known as Systeme automatise de Montreal (SAM), available to its Approved Participants in the U.S. without obtaining contract market designation or registering as a derivatives transaction execution facility pursuant to Sections 5 and 5a of the CEA.

02-29 ; Sections 5 and 5s of the Act; No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit the MEFF Sociedad Holding de Productos Financieros Derivados S.A., which wholly owns MEFF Sociedad Rectora de Productos Financieros Derivados de Renta Variable (MEFF RV) and MEFF Sociedad Rectora de Productos Financieros Derivados de Renta Fija (MEFF RF), to make its electronic trading and order matching system, known as MEFF S/MART, available to MEFF RV and MEFF RF members (including members of the Chicago Mercantile Exchange who are granted the right of access to MEFF contracts pursuant to the GLOBEX? Alliance Agreement) in the US without obtaining contract market designation or registering as a derivatives transaction execution facility pursuant to Sections 5 and 5a of the CEA.

02-38 ; Section 2(a); No-Action
Eurex Deutschland's request for no-action relief in connection with the offer and sale of its futures contracts based on the Dow Jones STOXX 600 Banking Sector Index and Dow Jones EURO STOXX Banking Sector Index in the United States.

02-56 ; Section 17(j); Regulation 3.12(d); No-Action
As part of the change from a paper-based registration system to an online registration system, NFA, a registered futures association, will not be able to process any registration filings for a two week "quiet period" as of the end of business on May 17, 2002. As a result of this "quiet period," persons could be disadvantaged because they could incur a late filing fee if the 20-day period during which they must file a Form 8-T expires during the "quiet period." Also, individuals who would be eligible for a special temporary license would lose that eligibility if the 60-day period within which they must file a new application after leaving their prior sponsor expiries during the "quiet period." NFA asked that it be permitted to waive the late filing fee for any late Form 8-T filed within the first 20 days that the online registration system is available. Additionally, NFA asked that it be permitted to issue a special temporary license to eligible individuals during the "quiet period." To obtain the temporary license, the sponsor must notify NFA that the individual has been employed as an AP and must file an electronic application for the individual within 20 days after the online registration system is available. The Division of Trading and Markets indicated that permitting NFA to waive the late fee and to grant a special temporary license in the manner described, would not be contrary to the public interest and the purposes of the Act and the Commission's rules thereunder.

02-59 ; Section 4m(1) of the Act; CFTC Rule 4.14(a)(1); No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit a power marketer to provide commodity trading advice to electric cooperatives and other participants in the wholesale energy market, without registering as a commodity trading advisor. This relief was based upon, among other reasons, the representation that the commodity trading advice would be limited to hedging transactions and would be offered only in conjunction with the provision of cash market services to entities that qualify as "eligible contract participants" under the Commodity Exchange Act.

02-80 ; Section 2(a); No-Action
JSE Securities Exchange South Africa requested no-action relief in connection with the offer and sale in the United States of its futures contract based on the FTSE/JSE 40 Top Companies Index.

02-81 ; Section 2(a); No-Action
Eurex Deutschland requested no-action relief in connection with the offer and sale in the United Stated of its futures contract on the Dow Jones Global Titans 50 Index.

02-86 ; Section 2(a); No-Action
ASX Futures Exchange Pty Limited's request for no-action relief in connection with the offer and sale of its futures contracts based on the Standard & Poors/Australian Stock Exchange 200 Index and the Standard & Poors/Australian Stock Exchange 50 Index in the United States.

02-87 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to the general partner of an offshore pool such that the investment manager of the pool could serve as the registered CPO of the pool instead of the pool's general partner. This position was based upon representations that: (1) the investment manager was in the process of registering as a CPO; (2) the general partner and the investment manger were affiliated entities; (3) the general partner was formed as a separate entity from the investment manager solely to comply with legal requirements of the pool's home country; and (4) the general partner and the investment manager executed cross acknowledgements of joint and several liability for any violations by the other of the CEA and Commission rules. The no-action position was expressly conditioned upon successful and continued registration as a CPO of the investment manager.

02-89 ; Section 4m(1); No-Action
The Division of Trading and Markets took a CPO and CTA registration "no-action" position with respect to a state-regulated insurance company's operation of one or more insurance company separate accounts. The premiums paid by purchasers of a life insurance product would be invested in, inter alia, pools operated by registered CPOs. Factors supporting granting the request included: (1) the investment manager allocating separate account assets would be registered CTA (and investee pools would all be operated by registered CPOs); (2) the requester was a state-regulated insurance company and the insurance product would be sold by SEC-registered broker-dealers; (3) the requester would design the insurance features of the proposed program and would not participate in the management of commodities-related investments (which will be the responsibility of a registered CTA); (4) separate account assets would be exposed to the commodity interest markets only indirectly through limited liability vehicles; and (5) only QEPs would be allowed to purchase the products.

02-90 ; Section 4f(a)(2); No-Action
The Division of Clearing and Intermediary Oversight took a no-action position with respect to certain securities broker-dealers and registered representatives who register with the Commission as limited-purpose FCMs and APs for the sole purpose of trading certain proprietary electronically-traded broad-based-index futures contract (the Contracts) on a specified contract market pursuant to Staff Letter 02-22. Under the no-action position, such limited-purpose FCMs and APs would be permitted to notice-register under Rule 3.10(a)(3) for the purpose of offering and selling security futures products without violating the commodity interest trading activity restrictions of Rule 3.10(a)(3)(A), provided that such limited purpose FCMs and APs otherwise comply fully with the terms and conditions of Staff Letter 02-22 with respect to the offer and sale of the Contracts, and the requirements of Rule 3.10(a)(3) with respect to the offer and sale of security futures products.

02-92 ; Rule 30.4(b); No-Action
The Division of Clearing and Intermediary Oversight issued a letter granting no-action relief to permit an entity to execute on behalf of customers located in the U.S. the futures portion of basis transactions cleared on Eurex Deutschland and the London International Financial Futures and Options Exchange without having to register as an introducing broker pursuant to Rule 30.4(b). The Division's no-action position is limited to the contracts specifically delineated in the letter and is subject to compliance with the terms and conditions set forth therein.

02-94 ; Rule 1.17, 1.25; No-Action
The Division of Clearing and Intermediary Oversight issued a no-action position with regard to FCM's that include the value of their clearing organization stock as an asset subject to certain conditions.

02-96 ; Sections 5 and 5a of the Act; No-Action
The Division of Market Oversight issued a letter amending the no-action relief granted November 12, 1999, permitting the International Petroleum Exchange of London Limited (IPE) to make its electronic trading and order matching system, known as Energy Trading System II, available to its members in the U.S. without obtaining contract market designation pursuant to Sections 5 and 5a of the CEA. Subject to two conditions, the amendment permits IPE to make its UK Natural Gas (NBP) futures contract available in the U.S. on an electronic trading system operated by Intercontinental Exchange, Inc., without obtaining contract market designation or registration as a derivatives transaction execution facility pursuant to Sections 5 and 5a of the CEA.

03-01 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight confirmed that an insurance company could engage an unregistered CTA (the Advisor) to advise certain of the insurance company's separate accounts pursuant to relief previously-granted to the insurance company, notwithstanding that the previously-granted relief specified that only registered CTAs would advise the separate accounts. The Division based its action on the following: (1) the Advisor is a Commission registrant (albeit as an IB and not as a CTA); (2) ach of the Advisor's principals is listed and its APs are registered; and (3) because the insurance company, the separate accounts and all separate account participants are QEPs, even if the Advisor were required to register as a CTA, it could claim relief under Rule 4.7 from otherwise applicable disclosure and recordkeeping requirements.

03-02 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight affirmed previously-taken CPO registration no-action positions (the Prior Relief) with respect to a co-general partner of a commodity pool (Pool 1) and directors of a second pool (Pool 2) that was the sole limited partner of Pool 1, notwithstanding that participation in Pool 2 would now be open to any QEP. Among the representations made in requesting the Prior Relief had been a representation that only non-U.S. persons and tax-exempt U.S. persons could participate in Pool 2. In affirming the Prior Relief, the Division noted that it had taken similar positions (subsequent to the Prior Relief) that were based on factors that did not include participant restrictions (i.e., co-general partners were affiliated and the co-general partner that solicited participants or invested pool assets was a registered CPO; the co-general partner seeking registration relief performed only administrative functions; and the co-general partners acknowledged joint and several liability for Commodity Exchange Act or Commission rule violations).

03-03 ; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took CPO and CTA registration no-action positions with respect to the manager of a limited liability company that sought to trade commodity interests, where both members of the LLC were commonly owned and controlled, and the LLC's manager was a registered investment adviser and a wholly-owned subsidiary of one of the LLC's members.