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
11/02/2001	01-83 ; Section 2(c) of the Act;; No-Action The Division of Trading and Markets responded to an inquiry on the regulation of the foreign currency market. The Division indicated that the Commodity Futures Modernization Act of 2000 had amended the Commodity Exchange Act to make clear that the offering of off-exchange foreign currency futures and options contracts to retail customers is unlawful unless the counterparty is a regulated entity enumerated in the Commodity Exchange Act, such as a registered FCM. Additionally, the Division noted that generally a person employed by an FCM to solicit customers must register as an AP of the FCM and a separate entity that introduces customers to an FCM must register as an IB. However, an entity that introduces retail customers to a registered FCM that is acting as counterparty under Section 2(c)(2)(B)(ii) of the Commodity Exchange Act may not be required to register as an IB, but may voluntarily do so.
11/02/2001	01-82 ; Section 2(c) of the Act; Rule 4.14(a)(9);; No-Action The Division of Trading and Markets responded to an inquiry on the regulation of the foreign currency market by a company that offers training courses on how to trade in off-exchange foreign currency. The Division indicated that the Commodity Futures Modernization Act of 2000 had amended the Commodity Exchange Act to make clear that the offering of off-exchange foreign currency futures and options contracts to retail customers is unlawful unless the counterparty is a regulated entity enumerated in the Commodity Exchange Act, such as a registered FCM. The Division noted that, based on the limited information provided by the company, the activities of the company might bring it within the definition of a CTA and, therefore, require registration as such. However, the Division further noted that, pursuant to Rule 4.14 (a)(9), the company may be exempt from registration as a CTA, but that, in order to qualify for this exemption, any opinion given as to what commodity interests to buy or sell in the company's courses may not be tailored to a client's particular circumstances and the company may not direct client accounts.
10/30/2001	01-84 ; Rule 1.31;; No-Action The Division of Trading and Markets stated that the requirement of Commission Rule 1.31 to retain a third party technical consultant if all, or all of a particular class, of a registrant's required records are stored on electronic media would not be met where an employee of the registrant kept duplicates of the records on a zip drive at the employee's home, subject to a written agreement to make the records available if, for any reason the records were not available at the registrant. The Division based its interpretation on the need for an actual third party, separate and distinct from the registrant, to assure Commission access to required records in the event that the principals and employees of the registrant with knowledge of the registrant's records storage systems became unable or unwilling to provide such access. Accordingly, an employee of the registrant would not be an acceptable substitute for the specified third party technical consultant.
10/24/2001	01-81 ; Regulations 4.7(b)(2) and 4.7(b)(3);; No-Action The Division of Trading and Markets provided exemptive relief to a registered CPO from the periodic and annual reporting requirements of Rules 4.7(b)(2) and 4.7(b)(3) in connection with its operation of a master fund that has as its sole participants two Feeder Funds that are also operated by the CPO. The relief is subject to the conditions that: (i) the CPO remain the CPO of the Master Fund and the Feeder Funds; (ii) participation in the Master Fund is limited to the two Feeder Funds; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund.
10/15/2001	01-87 ; Rules 4.14(a); 4.31; and 4.33 - 4.36 - Required disclosures by commodity trading advisors;; No-Action The Division of Trading and Markets stated, in response to an inquiry from a person who intended to develop a website with a daily forecast of the S&P 500 futures contract, that the unsettled nature of the proposed website did not permit delineation of the disclosures required under Commission rules. Nevertheless, the Division offered general guidance regarding: (1) the availability of exemption from CTA registration requirements for CTAs who provide advice on an impersonal basis that is not tailored to any client's particular circumstances; (2) the advisability, even for exempt CTAs, of clearly displaying all material information; (3) the applicability of Rule 4.41 regarding advertising, particularly to presentation of simulated or hypothetical trading results; (4) the applicability of the Part 4 disclosure and recordkeeping rules if a CTA is not within Rule 4.14(a)(9); and (5) the guidance available in the Commission's July 22, 2997, release regarding delivery of required disclosure materials in electronic environments.
10/11/2001	01-80 ; Rule 4.23;; No-Action A CPO requested relief from the requirement of the books and records location of Rule 4.23. The CPO was permitted to keep its books and records at a location other than its main business office. The CPO was permitted to maintain its books and records at the main business office of the entity that provides administrative services to the CPO.
09/28/2001	01-89 ; Section 4(a); Rule 4.14(a)(9) - Foreign currency futures and option; CTA registration exemption for providers of impersonal non-tailored trading advice;; No-Action The Division of Trading and Markets stated, in response to an inquiry from a person who intended to develop a website to provide foreign currency trading advice, that the Commodity Futures Modernization Act of 2000 had confirmed the CFTC's jurisdiction over foreign currency futures and options trading. The Division referred the person to the Commission's February 5, 2001, Advisory on Foreign Currency. Assuming that the subject matter of the proposed website could fall within CFTC jurisdiction, the Division offered general guidance regarding: (1) the general requirement that a CTA must register; (2) the availability of exemption from commodity trading advisor registration requirements for CTAs who provide advice on an impersonal basis that is not tailored to any client's particular circumstances; and (3) the applicability of a antifraud jurisdiction regardless of any registration exemption.
09/24/2001	01-79 ; Rule 4.22(d);; No-Action The CPO of a pool that closed requested exemption from the requirement of Rule 4.22(d) that the pool's 2001 Annual Report be audited. The participants supported the request. The exemption was granted.
09/10/2001	01-78 ; Regulation 4.21 and 4.22;; No-Action The Division of Trading and Markets provided exemptive relief to a registered CPO from the periodic and annual reporting requirements of Rules 4.21 and 4.22 in connection with its operation of a master fund that has as its sole participants two feeder funds that are also operated by the CPO. The relief is subject to the conditions that: (i) the CPO remain the CPO of the Master Fund and the Feeder Funds; (ii) participation in the Master Fund is limited to the two Feeder Funds; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master fund.
08/09/2001	01-77 ; Section4m (1);; No-Action The Division of Trading and Markets confirmed continued effectiveness of the positions taken in Staff Letter 00-83 notwithstanding the following changed facts: (1) acquisition by a bank holding company of one of the joint managers of a group of existing Puerto Rico mutual funds; and (2) the intention to employ one or more unaffiliated persons to advise certain additional Puerto Rico mutual funds (not yet formed). In each case the unaffiliated person would be either a registered CTA, a SEC-registered investment adviser or a person excluded from the definition of "investment adviser" under the Investment Advisers Act of 1940. In all other respects, the terms and conditions of Staff Letter 00-83 would be observed.