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
03/31/1998	98-28 ; Rule 4.7(a) - Request for Confirmation of Exemptive Relief from the Ten Percent Limitation on Investments in Exempt Pools;; No-Action 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.
03/31/1998	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.
03/25/1998	98-22 ; Rule 166.4 - Interpretative Advice for IB Operating as Branch Offices of Another IB;; No-Action 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.
03/24/1998	98-27 ; Rule 4.33;; No-Action 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.
03/24/1998	98-24 ; Rule 4.21;; No-Action 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.
03/24/1998	98-23 ; Rule 4.7(a)(2)(iv) and 4.7(b)(2)(ii);; No-Action 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.
03/24/1998	98-20 ; Section 4m(1), Rule 4.7(a), Rule 4.7(a);; No-Action 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.
03/23/1998	98-21 ; Rule 4.31;; No-Action 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.
03/16/1998	98-19 ; Section 4m(1) - CPO and CTA registration requirements;; No-Action 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.
03/12/1998	98-18 ; Section 4m(1) - CPO and CTA registration requirements;; No-Action 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.