CFTC Staff Letters Archive

CFTC Staff Letters Archive provides Letters from 2007 and earlier. For Letters published 2008 or later visit the All Letters page.

There are no Advisory Letters or Other Written Communications for 2007 or earlier.

Date	PDF and Description
06/22/1998	98-50 ; Rules 4.7(a)(2)(ii) and (a)(2)(iii);; No-Action 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.
06/22/1998	98-48 ; Rule 4.7(a);; No-Action 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).
06/16/1998	98-40 ; Rule 4.7(a);; No-Action 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.
06/16/1998	98-39 ; Rule 4.7(a);; No-Action 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.
06/12/1998	98-58 ; Rules 4.7, 4.21, 4.22 and 4.23;; No-Action 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.
06/12/1998	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.
06/12/1998	98-52 ; Rule 4.7(a) - Exemptive Relief CPOs;; No-Action 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.
06/12/1998	98-49 ; Rule 4.7(a) - Exemptive Relief for CPOs;; No-Action 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.
06/05/1998	98-38 ; Rule 4.7(a);; No-Action 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.
06/05/1998	98-37 ; Rule 4.7(a)(1)(ii)(B)(2)(xi) - Exemptive Relief for CPO;; No-Action 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.