CFTC Staff Letters

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 September 2009 through December 31, 2010. Additionally, because the notice for the 4.7 exemption was not filed until after the close of the fiscal year, the CPO also requested relief from the certification requirement for the period from September 2009 through December 31, 2009. The pool had seven participants at the end of the pool’s fiscal year, three of which were proprietary, and a net asset value of $1,XXX,XXX. The CPO provided executed waivers from all of the nonproprietary participants. 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 an Annual Report for the period from October 15, 2009 through December 31, 2010. The pool had seven participants at the end of the pool’s fiscal year and a net asset value of $6,XXX,XXX. 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. Additionally, the CPO requested relief from the distribution and filing of an uncertified Annual Report and relief from the requirement that financial information for fiscal year 2009 be included in the Annual report for fiscal year 2010. The pool began trading in January 2004 and had a net asset value of $1X,XXX. The CPO submitted signed waivers from the pool’s participants, which consisted of the CPO and the pool’s CTA, consenting to the relief requested. 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.

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 May 2007 and had a net asset value of $8X,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 that commenced operations in September of 2008 requested relief from Commission Regulations 4.22 (c) and (d), which require certification of the pool’s final Annual Report. The pool had only eight participants, total capital contributions of $3XX,XXX and, as of the pool’s liquidation date, $2X,XXX in net asset value. The CPO submitted signed waivers from each of the pool’s participants consenting to the exemption from the certified annual report requirement. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to the independent trustees of a commodity pool where the independent trustees had no authority to perform CPO functions, the independent trustees were appointed solely to comply with audit committee requirements under the Sarbanes Oxley Act and exchange listing requirements, and a separate registered CPO was authorized to perform all commodity pool operator functions. The Division further granted exemptive relief from certain of the Part 4 regulations to the registered CPO of a commodity pool, whose shares the CPO intended to publicly offer and to list for trading on a national securities exchange. As is discussed in the letter, this relief was in the nature of substituted compliance with those regulations.

The Division of Clearing and Intermediary Oversight (Division) denied a request for relief from the requirement that an introducing broker (IB) provide specific customer account identifiers to the IB’s clearing futures commission merchant at or prior to the time of order entry. The Division found insufficient as grounds for the requested relief the requester’s assertion that compliance with the requirement would result in price “slippage” and poor customer order fills.

The Division of Clearing and Intermediary Oversight issued an IB registration no-action position to a United States bank whose foreign branches wish to refer foreign customers to an affiliated registered FCM. This position was based in part on the branches being located outside the United States and the FCM accepting liability for the foreign branches.

The Division of Clearing and Intermediary Oversight provided no-action relief to the general partner of a commodity pool operator (CPO) from registering as such pursuant to Section 4m(1) of the Commodity Exchange Act (Act), and allowing a registered CPO (designee) to serve as the CPO instead. This relief is subject to conditions that: (1) the designee must serve as the CPO of the pool; and (2) the designee must remain registered as a CPO; (3) the general partner is not subject to a statutory disqualification under Section 8a(2) or 8a(3) of the Act; (4) the general partner and the designee are under common ownership and control; (5) the general partner has delegated all of its management authority to the designee pursuant to its limited partnership agreement and its investment management agreement; (6) the general partner has no employees acting on its behalf, does not engage in the solicitation of investors for the pool, does not manage property of the pool, and does not engage in any other activities that are subject to the Act or Commission regulations; and (7) the general partner and designee have 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 proprietary commodity pool (consisting only of the CPO and the CPO’s mother) requested relief from Commission Regulation 4.22(d), which requires certification of the pool’s annual report. The pool had, as of the close of its fiscal year, only $XXX,XXX in total assets, and the pool’s participants had received monthly account statements prepared by an unassociated third-party accounting firm. The CPO submitted signed waivers from each of 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).