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
12/30/1997	98-12 ; Rule 30.10;; No-Action Denial of Relief under Part 30 Order - The Commission determined not to provide relief to a foreign firm under certain orders granted under Commission Rule 30.10 where, among other things, the firm was doing business in, but not domiciled in, the country whose regulatory scheme was reviewed for comparability with that of the U.S. prior to granting the orders ("Host Country") and the firm would be regulated in part by its "home" country rather than solely by the Host Country as contemplated under the orders.
12/29/1997	97-99 ; Rule 4.7(a);; No-Action The Division of Trading and Markets provided relief under Rule 4.7(a) to registered CPO, notwithstanding the presence of non-QEPs in its pools, where the non-QEPs are employees of a wholly-owned subsidiary of the CPO that was established solely to provide research to the CPO. The non-QEPs are employed as analysts and traders for the subsidiary research company. However, relief was denied to one employee based on his brief experience working in the securities industry and his relative lack of financial resources compared to the QEP standards. The non-QEPs that were granted relief have ready access to information pertinent to an investment in the pool and agree to being treated as QEPs.
12/24/1997	98-03 ; Section 4d of the Act;; No-Action The Division of Trading and Markets denied registration relief to a farm management company that proposed to use options on agricultural futures contracts in order to hedge the production of its clients farms. The company stated that it intended to execute all trades through a single account and that it would assign interest in options contracts to its individual clients based upon the output from each farm that was required to be hedged. The Division, citing a previous similar letter, stated that the company would be required to register as a futures commission merchant in order to provide the hedging service. The Division also stated that because the company intended to assign partial interests in single option contracts to its clients, the proposed service may raise other regulatory issues.
12/24/1997	98-02 ; 4m(1);; No-Action The Division of Trading and Markets denied the request of the general partner of a limited partnership that sought to trade commodity interests for relief from the commodity pool operator registration requirement of Section 4m(1) of the Act. Among other things, the general partner had sought relief based upon representations that the limited partnership would engage in a de minimis amount of commodity interest trading. However, the Division stated that adequate relief was available to the general partner pursuant to Rule 4.12(b) and, thus, the Division did not believe further relief on an ad hoc basis was warranted. The Division indicated that if the general partner wished to pursue the issue of registration relief further, it should do so by a petition for rulemaking.
12/03/1997	98-13; ; Section 1a(11) and 2(a)(1)(A)(i) of the CEAct;; No-Action On December 3, 1997, the CFTC's Division of Economic Analysis issued an interruptive letter indicating that, in its view, certain transactions in agricultural commodities are forward contracts. The contracts are to be entered into between commercial agricultural participants for a set amount of commodity. The price of the commodity is determined at the delivery and will be bounded by minimum and maximum prices. The contracts create binding delivery obligations and will be for a set amount of commodity which does not vary depending upon the commodity's price level. Cancellation of the contracts absent an event beyond the parties' control is not to be permitted.
11/24/1997	97-91 ; Section 4(m) (1);; No-Action The Division of Trading and Markets declined to provide relief to a company that offered an agricultural marketing service from the requirement that it register as a commodity trading advisor (CTA). The Division stated that to the extent that the company recommend the use of commodity futures or options contracts to achieve it clients' marketing goals, the company was register as such. The company was also informed that if it intended to solicit discretionary authority over its clients commodity interest trading accounts, even if such authority was only sought to carry out the agreed upon marketing plans, or if it guided client accounts, the company would first have to provide its clients with a Disclosure Document pursuant to Rule 4.31.
11/21/1997	97-94 ; Section 4m(1);; No-Action The Division of Trading and Markets granted CPO registration "no-action" relief to an insurance company (that was also a registered investment adviser) in connection with acting as sponsor and fiduciary of a group trust comprised of assets of employee pension or profit-sharing plans or of governmental plans, on the condition that the insurance company would comply with the requirements of Rule 4.5. The Division also granted CTA registration "no-action" relief in connection with the insurance company providing commodity interest trading advice to the group trust, upon the additional conditions that the insurance company would not hold itself out as a CTA and that it would comply with the notice requirement of Rule 4.14(a)(8). Finally, the Division granted CPO registration "no-action" relief with respect to the failure of the trust company acting as the group trust's trustee and custodian, since the trust company would have minimal contact with participants, would have no investment discretion with respect to group trust assets, would not make investment recommendations or review the insurance company's investment decisions, and would have no authority to hire or fire the group trust's fund managers or its FCMs.
11/21/1997	97-92 ; Rule 4.7(a);; No-Action The Division of Trading and Markets provided relief under Rule 4.7(a) to a registered CPO, notwithstanding the presence of a non-QEP in its pools, where the non-QEP is an employee of the CPO who holds a high level officer position with the CPO. The non-QEP is investing in the pools on behalf of the CPO in order to act as the "Tax Matters Partner" for the pools in proceedings before the Internal Revenue Service. The non-QEP has ready access to information pertinent to an investment in the pool and agrees to being treated as a QEP.
11/18/1997	97-97 ; 1a(4) and 1a(5);; No-Action The Division of Trading and Market provided interpretative guidance in response to an inquiry concerning the ability of a registered futures commission merchant (FCM) also to be registered as a commodity trading advisor (CTA) or commodity pool operator (CPO). The Division noted that nothing in the Act or in the Commission's rules prohibited an FCM from also being registered as a CPO or CTA. The Division explained that pursuant to Rule 4.13(a)(2), an FCM could claim an exemption from CPO registration if the aggregate gross value for all commodity pools operated by the FCM did not exceed $200,000 and none of the pools contained more than fifteen participants at any time. Furthermore, Section la(5) of the Act provides a statutory exclusion from the CTA definition for certain categories of persons which includes, among others, banks, teachers and FCMs who provide commodity trading advice in a manner "solely incidental" to the conduct of their business or profession. The Division explained that, as a general rule, the Commission has not required an FCM which manages a customer's commodity interest account to register as a CTA so long as the firm is acting as an FCM with respect to the account, i.e., carrying the account on its books and accepting customer funds in connection with commodity interest transactions.
11/18/1997	97-96 ; Section 4m (1)-Requirement to Register as a CPO or as a CTA. Rule 4.14(a)(8)-Exemption from CTA registration for certain registered investment advisers.;; No-Action CPO and CTA registration no-action relief issued to a registered investment adviser in connection with the operation and advisement of an offshore fund based upon, among others, representation that: (1) the adviser was not a sponsor of the fund; (2) interests in the fund would be held solely by non-U.S. persons; (3) the primary responsibility for managing the fund rested with its Board and officers: (4) information provided by the adviser to existing and prospective participants would be limited to publicly available information; and (5) any U.S. contact would be minimal and would not be initiated by the adviser. In addition, no-action relief from certain of the criteria of Rule 4.14(a)(8) issued to the adviser such that it could continue to claim exemption from CTA registration with respect to certain of other funds for which it previously had filed a Rule 4.14(a)(8) notice of exemption.