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
01/31/1996	96-12 ; Section 5a(a)(12)(A) of the Act; Commission Rules 1.16, 1.56 and 33.4;; No-Action In response to an inquiry concerning whether the Commodity Exchange Act requires that a customer have sufficient funds in his account to margin a position prior to having the position established, the Division of Trading and Markets clarified that while Section 5a(a)(12)(A) of the Commodity Exchange Act generally excepts from regulation by the Commission "rules relating to the setting of levels of margin" (which are promulgated by the individual contract markets), the Commission has promulgated (a) Rule 1.56, which prohibits an FCM or IB from in any way representing that it will not call for or attempt to collect initial margin as established by a contract market and (b) Rule 1.16(d)(2), which requires that an FCM or IB must as a matter of internal controls know that it will be able to collect initial margin from an customer.
01/29/1996	96-14 ; Section 4m(1);; No-Action The Division of Trading and Markets granted a Company relief from registration commodity pool operator ("CPO") registration with respect to a Fund which was 99.8 percent owned by the three principals of the Company and by grantor trusts established by two of the principals for their children. Further, each of the three principals jointly participated in forming the Fund, has been directly involved in managing the Fund, and is a qualified eligible participant ("QEP") as the term is defined in Rule 4.7. The remaining portion of the Fund was owned by two long-standing business associates of the principals and employees of wholly-owned affiliates of the Company.
01/24/1996	96-13 ; Rule 4.7;; No-Action Three individuals with substantial financial sophistication may be treated as qualified eligible participants ("QEPs") under Rule 4.7 in connection with a proposed commodity pool they will manage. In addition to the proposed pool, the three individuals currently manage in excess of 1.25 billion dollars of assets. Further, the individuals will have complete access to all of the records regarding the pool.
01/18/1996	96-11 ; Section 4m(1);; No-Action No action relief granted to the operator of a commodity pool for failing to register as a CPO where all members of the pool are either family members, close personal friends, or long-time business associates of the operator and the operator is a successful and experienced commodity trader.
01/18/1996	96-03; ; Section 4m(1);; No-Action Two general partners were granted relief from CPO registration where, among other things: (1) the third general partner of the limited partnership was a registered CPO; (2) the two non-registering general partners agreed to limit their activities; and (3) all general partners agreed to assume joint and several liability for any violations committed by each other.
01/17/1996	96-16 ; Rule 4.7(a);; No-Action The Division of Trading and Markets took a no-action position that would allow a registered CPO to admit investors in a Pool who were not QEPs and still claim relief pursuant to Rule 4.7(a). The pool was a fund of funds. The non-QEP investors were all accredited investors. Moreover, they were sophisticated investors as a result of the experience gained through their employment or management of their personal fortunes and had business or personal links to the CPO.
01/03/1996	96-04; ; Rule 4.31;; No-Action Relief granted to a registered CTA from the disclosure document requirements in connection with the providing of commodity trading advice where (1) the CTA is organized and domiciled outside of the United States and (2) the sole client of the CTA is an offshore corporation with no U.S. persons as investors or directors.
01/01/1996	96-01 ; Rules 4.35 and 4.25(b);; No-Action Where a newly-formed CTA had the same principals as an existing CPO but where the principals perform different functions for the firms, relief from certain provisions of Rule 4.35(b) was issued. Confirmation of the applicability of Rule 4.25(b) also made.
12/28/1995	96-09 ; Rule 33.3;; No-Action The request of a registered CTA who is also an IB to confirm his opinion that he may withdraw his IB registration and continue to engage in certain commodity interest trading activities solely under his CTA registration is denied because the proposed activities appear to encompass solicitation of customer relationships on behalf of an FCM which is the usual course of business for an IB.
12/22/1995	96-05 ; Rule 4.7(b);; No-Action Relief granted to a registered CTA to provide commodity trading advice to a fund where the fund is an offshore entity comprised of only non-U. S. persons and is not otherwise eligible for QEC status and the CTA has no other clients that are not QECs; subject to the following conditions: (1) the fund is comparable in nature and purpose to one of the United States entities eligible for QEC treatment pursuant to Rule 4.7(b); (2) the fund has a portfolio with a minimum value of twenty-five million dollars; and (3) the fund consents in writing to being treated as a QEC.