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
04/04/2000	00-58 ; 4.22 (c) & (d);; No-Action The CPO of a small pool which commenced trading December 1, 1999, requested exemption from the requirement of Rule 4.22(d) that the pool's 1999 Annual Report be audited. The participants supported the request. The exemption was granted upon condition that (1) an unaudited 1999 annual report be provided to the participants and (2) the audited 2000 report will include the 1999 data.
04/03/2000	00-48 ; Rule 30.10;; No-Action The Division of Trading and Markets (Division) confirmed that, for U.S. customers trading the LMEX contract on the London Metal Exchange (LME), LME firms may comply with the standard provision for segregation of customer funds instead of the alternative segregation provision. Under Commission Rule 30.10 the Commission issued orders in May 1989 permitting U.K. firms to solicit and accept orders from U.S. customers for trading on U.K. markets, including LME. Because LME contracts have traditionally not been cash settled, U.K. firms were permitted, in lieu of standard segregation, to maintain a binding letter of credit or bank guarantee to cover forward profits and clearing exposures on the LME (i.e., the alternative segregation provision). The LMEX contract, however, will be cash settled and LME believes that standard segregation is appropriate with respect to that contract. The Division has confirmed that LME firms can treat the LMEX contract under standard segregation and all other LME contracts under the alternative segregation provision, even if the same customer is involved.
04/03/2000	00-47 ; 4.22(a) and (c);; No-Action The CPO of two separate pools requested relief from filing separate financial information for both. Based on the ownership structure, one pool invests substantially all of its assets in the other. The relief granted is subject to the CPO filing and distributing annual reports and periodic account statements representing the combined activities of the pools and the administrative participant in the pool submitting acknowledgment that it understands and agrees to the omission of receiving certain financial reporting information.
03/31/2000	00-46 ; Regulation 4.7;; No-Action A registered CPO requested relief from the requirement of filing an annual report in accordance with Section 4.7(a)(iii)(A). The CPO only filed a balance sheet for the end of the year. The request for relief was denied.
03/31/2000	00-45 ; 4.21, 4.22, 4.23(a)(10) and (a)(11);; No-Action The CPO of a small pool requested exemptive relieve from the above requirements in connection with the operation of an offshore commodity pool. The request met the requirements of Commission Advisory 18-96, and the exemption was granted upon condition that the CPO agree to certain conditions.
03/31/2000	00-44 ; Section 4d(1);; No-Action The Division of Trading and Markets (Division) issued an IB registration no-action position to a United States bank whose foreign branches wish to refer foreign customers to a registered FCM. The Division's position was based upon the bank's representations, among others, that: (1) the bank is a national banking association regulated by the OCC; (2) the bank's offices in the United States will not engage in any activities subject to regulation by the Commission; (3) the bank will identify to the Commission the foreign branches that will engage in the above-described conduct; (4) the registered FCM will be jointly and severally liable with the bank for any violations of the CEA or regulations issued thereunder arising from or relating to the foreign branches' referral activities; (5) the foreign branches will do no more than refer foreign customers who want to enter into futures transactions on United States markets to the FCM, and the FCM will be responsible for the transactions; and (6) the foreign branches are subject to regulation by the relevant regulatory authorities in the countries in which they are located.
03/30/2000	00-54 ; Rule 4.7(a);; No-Action The Division of Trading and Markets permitted a registered CPO to continue to treat a pool established for the employees of the manager of a fund as if it satisfies the QEP criteria of Rule 4.7(a) in connection with the investment of the pool in the fund, notwithstanding the addition of two non-QEP employees to the pool. The non-QEP employees are: (1) employed by the manager of the fund as research analysts; (2) have over two years experience in the financial services industry; and (3) are accredited investors as defined in Rule 501(a)(6) under the Securities Act of 1933. The Division also permitted the CPO to maintain its exemption from the specific requirements of Rules 4.21 through 4.26 in connection with its operation of the employee pool.
03/24/2000	00-53 ; Section 4m(1);; No-Action The Division of Trading and Markets took a CPO registration "no-action" position with respect to the directors of a real estate investment trust (REIT) formed to invest primarily in single-family non-conforming mortgage securities and loans. This position was based upon representations, among others, that the REIT: intended to use commodity interest trading solely for bona fide hedging transactions; would commit no more than 1% of the fair market value of its assets to commodity interest trading; and would limit income derived from commodity interest trading to 5% of its gross income. The Division also took a CTA registration no-action position with respect to the two executives of the REIT who will provide it commodity interest trading advice, on the condition that the executives do not provide such trading advice to any other person.
03/24/2000	00-50 ; Section 4m(1);; No-Action The Division of Trading and Markets took a CPO registration "no-action" position with respect to a real estate investment trust that intended to use commodity interest trading solely for bona fide hedging transactions, that would commit no more than 1% of the fair market value of its assets to commodity interest trading, and that would limit income derived from commodity interest trading to 5% of its gross income. The Division also took a CTA registration no-action position with respect to the closely-affiliated advisory entity, on the condition that it does not provide commodity interest trading advice to any other person.
03/24/2000	00-49 ; Section 4m(1);; No-Action The Division of Trading and Markets took a CPO registration "no-action" position with respect to a real estate investment trust that intended to use commodity interest trading solely for bona fide hedging transactions, that would commit no more than 0.5% of the fair market value of its assets to commodity interest trading, and that would limit income derived from commodity interest trading to 5% of its gross income. The Division also took a CTA registration no-action position with respect to the closely-affiliated advisory entity, on the condition that it does not provide commodity interest trading advice to any other person.