Exclusion from the CPO and Pool Definitions

Rule 4.5 ( 17 C.F.R. 4.5) makes available an exclusion from the definition of the term "commodity pool operator" for certain otherwise regulated persons in connection with their operation of specified trading vehicles. Persons desiring to claim an exclusion from the CPO definition under Rule 4.5 must file a notice of eligibility with the National Futures Association. While the Commission does not have a standard form for the notice of eligibility, paragraph (c) of the Rule specifies the information and representations required in the notice.

Rule 4.5 also excludes certain other trading vehicles from being construed to be commodity pools. This relief is self-executing. Thus, the operators of these trading vehicles are not required to file any notice or make any specified representations to claim this exclusion.


Exemption from Registration as a CTA

Section 4m(1) of the Commodity Exchange Act provides an exemption from registration for a person who, in the preceding twelve months, has not furnished commodity trading advice to more than 15 persons and who does not hold himself out generally to the public as a CTA.

Section 4m(3) provides an exemption from CTA registration for a person: (1) who is registered with the Securities and Exchange Commission as an investment adviser; (2) whose business does not consist primarily of acting as a commodity trading advisor; and (3) who does not act as a commodity trading advisor to any investment trust, syndicate, or similar form of enterprise that is engaged primarily in trading in any commodity for future delivery on or subject to the rules of any contract market or registered derivatives transaction execution facility.(This section was added to the CEA by the Commodity Futures Modernization Act of 2000.)

Rule 4.14 ( 17 C.F.R. 4.14) provides that a person who meets the requirements set forth in any one of paragraphs (a)(1) through (10) of the Rule is not required to register as a CTA. If a person is exempt from registration as a CTA pursuant to paragraph (a)(8) of the Rule, the person must file with the National Futures Association a notice of exemption. While the Commission does not have a standard format for the notice of exemption, paragraph (iii) of the Rule provides that certain information and representations be included.

The relief available under Sections 4m(1) and 4m(3) of the CEA and Rules 4.14(a)(1) through (7) and (9) is self-executing. Thus, these persons are not required to file any notice or make any specified representations to claim the relief.


Exemption From Registration as a CPO

Rule 4.13 ( 17 C.F.R. 4.13) makes available an exemption from commodity pool operator registration for certain persons. Broadly speaking, these persons are the operators of "family, club and small" pools, as those terms are defined in the rule, as well as pools that have limited futures activity or that restrict participation to sophisticated persons.

A person claiming this exemption must file a statement with the National Futures Association. While the Commission does not have a standard form for the statement, paragraph (b) of the Rule specifies the information and representations required in the statement.


Exemption from Certain Part 4 Requirements Where Participants are "Qualified Eligible Persons"

Rule 4.7 ( 17 C.F.R. 4.7) makes available an exemption from certain Part 4 requirements with respect to the operators of commodity pools whose participants are limited to "qualified eligible persons" and with respect to commodity trading advisors who advise "qualified eligible persons," as defined in the Rule. Briefly stated, "QEPs" include such persons as certain investment professionals, knowledgeable employees, qualified purchasers, non-United States persons, and accredited investors who meet a portfolio requirement.

Persons desiring to claim exemption under Rule 4.7 must file a notice of claim for exemption with the National Futures Association. While the Commission does not have a standard form for the notice, paragraph (d) of the Rule specifies the information and representations required in the notice.


Exemption from Certain Part 4 Requirements Where Pool Meets Certain Trading Criteria

Rule 4.12(b) ( 17 C.F.R. 4.12) provides an exemption from certain Part 4 requirements for the operators of certain commodity pools. Among other things, the pools these CPOs operate do not commit more than 10% of the fair market value of their assets to establish commodity interest trading positions and they trade commodity interests in a manner solely incidental to their securities trading activities.

Persons desiring to claim exemption under Rule 4.12(b) must file a notice of claim for exemption with the National Futures Association. While the Commission does not have a standard form for the notice, paragraph (3) of the Rule specifies the information and representations required in the notice.


Addresses for filing notices claiming CPO or CTA exclusion or exemption:

National Futures Association
Attn: Director of Compliance, Compliance Department
200 W. Madison Street
Suite 1600
Chicago, IL 60606