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
03/14/2005	05-06 ; Section 4d, CEAct;; No-Action The Division of Clearing and Intermediary Oversight issued a letter granting no-action relief to permit the foreign affiliate of a futures commission merchant (FCM) to execute transactions via its internet-based order entry system on behalf of the FCM’s institutional and commercial customers in the U.S. for trading on U.S. exchanges without the affiliate having to register as an introducing broker (IB) pursuant to section 4d of the Commodity Exchange Act (Act). The FCM currently is connected to the internet-based order entry system for the purpose of gaining direct access to non-U.S. exchanges for its U.S. customers. Pursuant to Rule 30.10, the foreign affiliate has been granted exemption from registration as an FCM for purposes of offering foreign futures and options to U.S. customers. The Rule 30.10 relief, however, does not extend to any activities related to trading, directly or indirectly on U.S. exchanges. As a condition to the no-action relief, the foreign affiliate will not solicit any U.S. customers for trading on any U.S. market or handle any U.S. customer funds related to trading on any U.S. market, and all trades in U.S. contracts will be cleared directly by the FCM. In addition, the no-action relief is conditioned upon the FCM’s acknowledgment that it will be jointly and severally liable for any violations of the Act or the Commission’s rules committed by the foreign affiliate in connection with those activities.
03/14/2005	05-05 ; 31 CFR §103.123 and 17 CFR §42.2;; No-Action No-Action letter that permits FCMs and IBs to rely upon certain CTAs to perform procedures of the FCM’s or IB’s customer identification program.
03/14/2005	05-04 ; Section 2(a);; No-Action Osaka Securities Exchange Co., Ltd.’s request for no-action relief in connection with the offer and sale in the United States of its futures contract based on the Russell/Nomura Prime Index.
02/23/2005	05-10 ; Rules 1.17 and 1.10;; No-Action The Division of Clearing and Intermediary Oversight (DCIO) issued a letter granting no-action relief to a futures commission merchant (FCM) that is also registered as a securities broker-dealer (BD) with the U.S. Securities and Exchange Commission (SEC), and who has been approved by SEC order to compute its net capital using alternative deductions for market risk for its proprietary positions in securities and other trading assets. The SEC approved the alternative deductions pursuant to amendments to its net capital rule (Rule 15c3-1) adopted last June, by which certain BDs that are subject to group-wide consolidated supervision may be approved to use mathematical models in computing their minimum net capital. The FCM requested relief from Division staff allowing it to use its SEC-approved alternative deductions when computing its adjusted net capital under Rule 1.17(c), and to file copies of the same financial condition report with both the SEC and the Commission, as it previously had been able to do under Commission Rule 1.10. In granting the requested relief, subject to the conditions set forth in its response letter, DCIO stated that its no-action position would be deemed withdrawn in the event that the Commission adopted amendments to Rule 1.17 establishing requirements for the use by jointly registered FCM/BDs of their SEC-approved alternative deductions.
01/26/2005	05-03 ; Sections 4a, 4c(b), 4g, 4i; Parts 15 through 18, and 21 of Commission’s Regulations;; No-Action The Division of Market Oversight (Division) has granted no-action relief to U.S. Futures Exchange, LLC (Eurex U.S.) from Commission Rule 15.03(b). Commission Rule 15.03(b) establishes contract reporting levels for futures and option contracts. Eurex U.S. will list and commence trading in futures and option contracts based on 3-Year U.S. Treasury Notes (3-Year T-Notes) on February 1, 2005. Since 3-Year T-Notes are newly offered, the default reporting level of 25 contracts set out in Commission Rule 15.03(b) will apply to such contracts absent relief from the Division or the Commission. Although 3-Year T-Notes are new products, they are similar to 2-Year T-Note contracts that have been offered for many years and are widely traded. In light of the similarities between 2- and 3-Year T-Notes, and discussions between the Division’s surveillance staff and Eurex U.S., the Division believes that a reporting level of 750 contracts is appropriate pending the adoption of final rules establishing a contract reporting level for 3-Year T-Notes. The Division believes that a reporting level of 750 contracts eases the burden of reporting on market participants and preserves the Commission’s ability to effectively surveil trading in 3-Year T-Notes.
01/05/2005	05-01 ; Commission Rule 4.22;; No-Action The Division of Clearing and Intermediary Oversight issued an exemption to certain commodity pool operators (CPO) from the requirement of Rule 4.22(j) that the oath or affirmation in commodity pool annual reports filed with a registered futures association contain a manual signature. National Futures Association (NFA), a registered futures association which the Commission has authorized to receive and review pool annual reports filed in accordance with Commission Rule 4.22(C), had requested the exemption so that CPOs may participate in NFA’s voluntary pilot program for electronic filing of reports, commencing with reports for the year ending December 31, 2004.
12/15/2004	04-35 ; Section 5 and 5a of the CEAct;; No-Action The Division of Market Oversight issued a letter granting no-action relief to permit the Winnipeg Commodity Exchange, Inc. (WCE) to make its electronic trading and order matching system, known as the e-cbot? trading platform powered by LIFFE CONNECT?, available to WCE 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 CEAct.
12/10/2004	05-02 ; Rule 30.4(a) and 30.1(e);; No-Action The Division of Clearing and Intermediary Oversight issued a letter granting no-action relief to permit the U.S. affiliate of a futures commission merchant (FCM) to execute and clear foreign futures and foreign options transactions for the foreign futures and options customer omnibus accounts of the FCM without the affiliate having to register as an FCM pursuant to Rule 30.4(a). Rule 30.4(a) provides that a foreign futures and options broker (FFOB), as defined in Rule 30.1(e), is not required to register with the Commission as an FCM if, among other things, the FFOB solely accepts orders or carries an FCM's foreign futures and options customer omnibus account(s). Although the affiliate conducts no brokerage or trading activities in the U.S. and is a member of a foreign board of trade and subject to regulation in the jurisdiction in which the foreign board of trade is located, the affiliate does not satisfy the Rule 30.1(e) definition of FFOB because it is not a "non-U.S. person" by virtue of its incorporation in the U.S. Absent relief, the affiliate would be precluded from operating pursuant to Rule 30.4(a) without obtaining registration as an FCM. Among other things, the relief is conditioned upon the FCM's acknowledgment that it will be jointly and severally liable for any violations of the Act or the Commission's rules committed by the foreign affiliate in connection with those activities.
10/25/2004	04-33 ; Sections 5 and 5a of the CEA;; No-Action The Division of Market Oversight issued a letter granting no-action relief to permit the European Energy Exchange (EEX), and its operator European Energy Exchange AG, to make its electronic trading and order matching system available to EEX trading participants in the U.S. without obtaining contract market designation or registration as a derivatives transaction execution facility pursuant to sections 5 and 5a of the CEA.
10/25/2004	04-32 ; Sections 5 and 5a of the CEA;; No-Action The Division of Market Oversight issued a letter amending the no-action relief granted August 11, 1999, permitting the Sydney Futures Exchange Limited (SFE) to make its electronic trading and order matching system, known as SYCOM?, available to its members in the U.S. without obtaining contract market designation pursuant to sections 5 and 5a of the CEA. The amendment permits SFE to make SYCOM? available to non-Exchange Participants in the U.S. without obtaining contract market designation or registration as a derivatives transaction execution facility pursuant to sections 5 and 5a of the CEA.