CFTC Staff Letters

Securities and Exchange Commission (SEC) rule 22e-3 (Rule 22e-3), adopted by the SEC February 23, 2010 and effective May 5, 2010, allows a money market mutual fund (MMMF or fund) to suspend redemptions and postpone payment of redemption proceeds to facilitate an orderly liquidation of the fund. The Division of Clearing and Intermediary Oversight (the Division) received a letter from the Joint Audit Committee requesting an interpretation of the impact, if any, of Rule 22e-3 on Reg. 1.25. In its response, the Division provided an overview of the Reg. 1.25 treatment of MMMFs, outlined Rule 22e-3, and discussed the interplay of Reg. 1.25 and Rule 22e-3. The Division concluded that Rule 22e-3 falls within the parameters of Reg. 1.25(c)(5)(ii)(D) and therefore the status of an MMMF that otherwise qualifies as a Reg. 1.25 permitted investment would not change as a result of the new rule.

The Division of Market Oversight issued a letter granting no-action relief to permit the International Maritime Exchange ASA (Imarex or the Exchange) to make its electronic trading and order matching system (Trayport), and its Application Program Interface (API), available via direct access to Exchange trading members 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 CEAct. The relief applies to Imarex trading members in the U.S. that qualify as “eligible contract participants” (ECP) (as defined in Section 1a(12) of the CEAct) trading for their proprietary accounts; Imarex trading members that are registered as futures commission merchants (FCM) that submit orders to Trayport for execution from or on behalf of U.S. customers that qualify as ECPs; firms exempt from such registration pursuant to Commission Rule 30.10 (Rule 30.10 Firms) that accept orders through automated order routing systems for transmission to Trayport from or on behalf of U.S. customers that qualify as ECPs; and Imarex trading members that are registered as Commodity Pool Operators (CPO) or Commodity Trading Advisors (CTA), or exempt from such CPO or CTA registration pursuant to Commission Regulation 4.13 or 4.14, that submit orders for execution on behalf of U.S. pools they operate that qualify as ECPs or accounts of U.S. customers that qualify as ECPs, for which they have discretionary authority, respectively, provided that an FCM or Rule 30.10 Firm acts as clearing firm and guarantees without limitation all such trades of the CPO or CTA effected through submission of orders on Trayport.

The Division of Clearing and Intermediary Oversight provided no-action relief to the general partner of a commodity pool from registering as a CPO under Section 4m(1) of the Commodity Exchange Act, and allowed an affiliated, registered CPO (“designee”) to serve as the CPO of the pool instead, where, among other things: (1) the general partner and the designee are under common ownership and control; (2) the general partner has delegated all of its management authority to the designee; (3) the general partner does not engage in the solicitation of investors for the pool and does not manage property of the pool; and (4) the general partner and designee executed and submitted to the Division a written acknowledgement of joint and several liability for any violation by either of them of the Act or the Commission’s regulations.

The CPO of a commodity pool requested relief from Commission Regulations 4.22(c) and (d), which require the filing and distribution of a certified Annual Report for the pool. The pool began trading in 2007 and had a net asset value of $1X,XXX. The CPO submitted signed waivers from the pool’s eight participants consenting to the exemption from the certified annual relief requirement. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a) conditioned upon the future filing and distribution of a certified Annual Report for the period from January 1, 2009 through December 31, 2010.

The CPO of two commodity pools requested exemptive relief to permit it to file Annual Reports for the pools for the period from the inception of trading on November 1, 2009 through December 31, 2010. The pools had a total of three participants at the end of the pool’s fiscal year and a net asset value of $3,XXX,XXX and $5X,XXX,XXX. The CPO submitted waivers from the participants evidencing their consent to the relief requested. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of a commodity pool requested exemptive relief to permit it to file an Annual Report for the period from the inception of trading in November 2009 through December 31, 2010. The pool had three participants at the end of the pool’s fiscal year and a net asset value of $1XX,XXX. The CPO submitted waivers from the participants evidencing their consent to the relief requested. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of a commodity pool requested exemptive relief to permit it to file an Annual Report for the period from the inception of trading in October 2009 through December 31, 2010. The pool had one participant at the end of the pool’s fiscal year and a net asset value of $2XX,XXX. The CPO submitted a waiver from the participant evidencing her consent to the relief requested. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of a commodity pool that operates pursuant to an exemption under Regulation 4.7 requested exemptive relief to permit it to file a final annual report for the period from January 1, 2009 through the permanent cessation of trading on March 31, 2010. The pool had five participants at the end of the pool’s fiscal year and a net asset value of $66,XXX,XXX. The CPO submitted waivers from the participants evidencing their consent to the relief requested. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of a commodity pool requested relief from Commission Regulations 4.22(c) and (d), which require the filing and distribution of a certified Annual Report for the pool. The pool began trading in August 2008 and had a net asset value of $3XX,XXX. The CPO submitted signed waivers from the pool’s participants consenting to the exemption from the certified annual relief requirement. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a) conditioned upon the future filing and distribution of a certified Annual Report for the period from January 1, 2009 through December 31, 2010.

The CPO of a commodity pool requested relief from Commission Regulations 4.22(c) and (d), which require the filing and distribution of a certified Annual Report for the pool. Additionally, the CPO requested relief from the distribution and filing of an uncertified Annual Report. The pool began trading in June 2007 and had a net asset value of $2XX. The pool had no nonproprietary participants, and has plans to resume trading commodity interests and offering interests in the pool in 2010. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a) with respect to the request for relief from the certification requirement, conditioned upon the future filing and distribution of a certified Annual Report for the period from January 1, 2009 through December 31, 2010. DCIO, however, denied the remainder of the request as not being in the public interest.