CFTC Staff Letters

The CPO requested relief from the requirement of Regulation 4.22(c) that the Pool file a certified Annual Report within 90 days of the end of the fiscal year on December 31, 2008. The CPO requested permission to file a single, certified Annual Report for the Pool for the 16-month period from January 1, 2008 through April 29, 2009, upon which date the Pool ceased trading and began distributing funds to participants. The CPO also requested an extension of the 90-day period from July 29, 2009 to September 30, 2009. Pursuant to the authority delegated by Regulations 140.93 and 4.12(a), the Division granted relief from the Annual Report requirement of Regulation 4.22(c) for the Pool’s fiscal year ending December 31, 2008 and denied the request for relief with respect to the 90-day filing period.

The CPO of a commodity pool with the majority of its assets embroiled in a bankruptcy requested relief from the ongoing reporting requirements under Part 4. The CPO filed an Annual Report for the Pool for the 2007 fiscal year, which contained information regarding the bankruptcy. DCIO granted relief pursuant to Regulations 140.93 and 4.12(a), but conditioned such relief on the following representations being made to the Commission and participants: the Pool has ceased trading; the pertinent facts regarding the bankruptcy and the frozen assets, including, but not limited to, the value of the assets, the percentage of the Pool’s NAV that the frozen assets represent, and the date upon which the bankruptcy petition was filed; the pertinent facts regarding the value of any assets presently being held by the Pool that have not been distributed to participants and the reasons for their retention; a representation that no additional fees will be deducted from the assets held by the Pool; the pertinent facts regarding the disposition of any income generated by the assets held by the Pool, if any; a representation regarding whether any assets have been distributed to participants; a representation regarding how payouts from the bankruptcy estate will be distributed to participants; i.e., whether distributions will be made as funds are received from the bankruptcy estate or whether payouts will be retained by the Pool until the final payout is received from the estate; a representation regarding any write down of the value of the claim against the bankruptcy estate; a representation regarding the distribution of assets on a pro rata basis to participants; and a representation that the financial information contained in the Pool’s liquidation report remains accurate. Additionally, DCIO required that the CPO make a final disclosure to the Commission and participants upon the final disbursement of the Pool’s assets.

The CPO of a commodity pool with a de minimus amount of its assets embroiled in a bankruptcy requested relief from the ongoing reporting requirements under Part 4. The CPO filed an Annual Report for the Pool for the 2008 fiscal year, which contained information regarding the illiquid assets. DCIO granted relief pursuant to Regulations 140.93 and 4.12(a), but conditioned such relief on the following representations being made to the Commission and participants: the Pool has ceased trading; the pertinent facts regarding the bankruptcy and the frozen assets, including, but not limited to, the value of the assets, the percentage of the Pool’s NAV that the frozen assets represent, and the date upon which the bankruptcy petition was filed; the pertinent facts regarding the value of any assets presently being held by the Pool that have not been distributed to participants and the reasons for their retention; a representation that no additional fees will be deducted from the assets held by the Pool; the pertinent facts regarding the disposition of any income generated by the assets held by the Pool, if any; a representation regarding whether any assets have been distributed to participants; a representation regarding how payouts from the bankruptcy estate will be distributed to participants; i.e., whether distributions will be made as funds are received from the bankruptcy estate or whether payouts will be retained by the Pool until the final payout is received from the estate; a representation regarding any write down of the value of the claim against the bankruptcy estate; a representation regarding the distribution of assets on a pro rata basis to participants; and a representation that the financial information contained in the Pool’s liquidation report remains accurate. Additionally, DCIO required that the CPO make a final disclosure to the Commission and participants upon the final disbursement of the Pool’s assets.

The CPO of a commodity pool requested that DCIO agree to accept the Annual Report for the period from January 1, 2008 through October 31, 2008 as the Pool’s final annual report despite the fact that the Pool had not fully liquidated due to the illiquid nature of two assets relating to the bankruptcies of two corporations. The two assets constituted less than one percent of the Pool’s net asset value and all other funds have been returned to participants. DCIO determined that the CPO satisfied its obligations under Part 4 and that as such, the Pool’s Annual Report for the period from January 1, 2008 through October 31, 2008 constituted its final Annual Report.

The CPO of a commodity pool that operated 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, 2008 through January 31, 2009. The Pool had nine participants on the date that the Trustee for the Pool determined to liquidate and a net asset value of $3X,XXX,XXX. The Pool made its final distribution to participants on January 31, 2009. DIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of a commodity pool with illiquid assets requested relief from the ongoing reporting requirements under Part 4. The CPO intended to file an Annual Report for the Pool for the 2008 fiscal year, which would contain information regarding those assets. DCIO granted relief pursuant to Regulations 140.93 and 4.12(a), but conditioned such relief on the following representations being made to the Commission and participants: the Pool has ceased trading; the pertinent facts regarding the illiquid assets, including, but not limited to, the value of the assets and the percentage of the Pool’s NAV that the illiquid assets represent; the pertinent facts regarding the value of any liquid assets presently being held by the Pool that have not been distributed to participants and the reasons for their retention; a representation that no additional fees will be deducted from the assets held by the Pool; the pertinent facts regarding the disposition of any income generated by the assets held by the Pool, if any; a representation regarding whether any assets have been distributed to participants; and a representation regarding the distribution of assets on a pro rata basis to participants. Additionally, DCIO required that the CPO make a final disclosure to the Commission and participants upon the final disbursement of the Pool’s assets.

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 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.

Hong Kong Futures Exchange Limited’s Request for No-Action Relief in Connection with the Offer and Sale of its Mini Futures Contracts Based on the Hang Seng Index and the Hang Seng China Enterprises Index in the United States.

The Division of Market Oversight issued a no-action letter to BNP Paribas confirming that the Division will not recommend that the Commission initiate enforcement action against BNP Paribas or Fortis Bank S.A./N.V., or their respective affiliates, for violation of Commission or exchange speculative position limits, to the extent any such violation results from the application of the Commission’s aggregation policy and rules to the acquisition by BNP Paribas of Fortis Bank. The no-action relief applies only to aggregated positions created by the acquisition by BNP Paribas of Fortis Bank and is subject to the following conditions: (1) BNP Paribas and Fortis Bank must proceed promptly following the acquisition to verify compliance with applicable limits or to identify and implement, not later than January 15, 2009, any measures that may be necessary to ensure compliance prospectively with applicable limits, and (2) BNP Paribas and Fortis Bank must not, following the acquisition and prior to January 15, 2009, further add to any aggregated positions found not to be in compliance with Commission or exchange speculative position limits.