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
01/09/2006	06-01 ; Sections 16.01 and 40.6(c)(2)(iv);; No-Action The Division of Market Oversight has issued a no-action letter that would permit designated contract markets (DCMs) to satisfy the requirement to file notifications of changes to discretionary option strike prices, pursuant to section 40.6(c)(2)(iv) of the Commission’s regulations, by complying with the daily reporting requirements of section 16.01 of the Commission’s regulations. The no-action position relieves DCMs of the burden of filing unnecessary, duplicative data regarding such discretionary option strike price listings.
12/16/2005	05-24 ; Sections 5 and 5a of the Act;; No-Action The Division of Market Oversight issued a letter granting no-action relief to permit NYMEX Europe Limited to make its electronic trading and order matching system (NYMEX ACCESS®, to be replaced at a later date by NYMEX ClearPort(sm) Trading) available to NYMEX Europe Limited members in the U.S. without obtaining contract market designation or registration as a derivatives transaction execution facility pursuant to Sections 5 and 5a of the CEAct. The relief applies to NYMEX Europe Limited members trading for their own accounts; NYMEX Europe Limited members who are registered as futures commission merchants (FCMs) or who are exempt from such registration pursuant to CFTC Rule 30.10 (Rule 30.10 Firms) submitting orders from or on behalf of U.S. customers for transmission to NYMEX ACCESS® or NYMEX ClearPort(sm) Trading or accepting orders for U.S. customers transmitted via automated order routing systems for submission to NYMEX ACCESS® or NYMEX ClearPort(sm) Trading; and NYMEX Europe Limited members who are registered as Commodity Pool Operators (CPO) or Commodity Trading Advisors (CTA), or who are exempt from such CPO or CTA registration pursuant to Commission Regulation 4.13 or 4.14, submitting orders on behalf of U.S. pools they operate or U.S. customer accounts for which they have discretionary authority, respectively, for transmission to NYMEX ACCESS® or NYMEX ClearPort(sm) Trading, provided that a NYMEX clearing member that is registered as an FCM acts as clearing firm with respect to all activity conducted by such CPOs and CTAs through the submission of orders on NYMEX ACCESS® or NYMEX ClearPort(sm) Trading.
11/30/2005	05-21 ; Rules 1.17 and 1.10;; No-Action The Division of Clearing and Intermediary Oversight (DCIO) has issued letters granting no-action relief to two futures commission merchants (FCMs) that are also registered as securities broker-dealers (BDs) with the U.S. Securities and Exchange Commission (SEC), and who have been approved by SEC order to compute their net capital using alternative deductions for market risk and credit risk for proprietary trading assets of the BD. The SEC approved the alternative deductions pursuant to amendments to its net capital rule (Rule 15c3-1) adopted last June, by which certain BDs that are subject to group-wide consolidated supervision may be approved to use mathematical models in computing their minimum net capital. Each FCM requested relief from Division staff that would allow it to use its SEC-approved alternative deductions when computing its adjusted net capital under Rule 1.17(c), and to file copies of the same financial condition report with both the SEC and the Commission, as it previously had been able to do under Commission Rule 1.10. In granting the requested relief, subject to the conditions set forth in its response letters to each of the firms, DCIO stated that its no-action position would be deemed withdrawn in the event that the Commission adopted amendments to Rule 1.17 establishing requirements for the use by jointly registered FCM/BDs of their SEC-approved alternative deductions.
11/30/2005	05-20 ; Rules 1.17 and 1.10;; No-Action The Division of Clearing and Intermediary Oversight (DCIO) has issued letters granting no-action relief to two futures commission merchants (FCMs) that are also registered as securities broker-dealers (BDs) with the U.S. Securities and Exchange Commission (SEC), and who have been approved by SEC order to compute their net capital using alternative deductions for market risk and credit risk for proprietary trading assets of the BD. The SEC approved the alternative deductions pursuant to amendments to its net capital rule (Rule 15c3-1) adopted last June, by which certain BDs that are subject to group-wide consolidated supervision may be approved to use mathematical models in computing their minimum net capital. Each FCM requested relief from Division staff that would allow it to use its SEC-approved alternative deductions when computing its adjusted net capital under Rule 1.17(c), and to file copies of the same financial condition report with both the SEC and the Commission, as it previously had been able to do under Commission Rule 1.10. In granting the requested relief, subject to the conditions set forth in its response letters to each of the firms, DCIO stated that its no-action position would be deemed withdrawn in the event that the Commission adopted amendments to Rule 1.17 establishing requirements for the use by jointly registered FCM/BDs of their SEC-approved alternative deductions.
11/23/2005	05-23 ; Section 2(a);; No-Action Eurex Deutschland’s request for no-action relief in connection with the offer and sale in the United States of its Dow Jones Italy Titans 30 Index Futures Contracts.
11/10/2005	05-22 ; Section 4m(1);; No-Action The Division of Clearing and Intermediary Oversight issued a CTA registration “no-action” position to a third party trading system developer where (1) the third party trading system developer’s clients execute a “letter of direction” authorizing an IB to trade those clients’ accounts pursuant to the third party trading system developer’s trading signals; (2) the IB shares common principals with the third party trading system developer; and (3) the IB does not provide services to its customers other than trading their accounts pursuant to the third party trading system developer’s trading signals, subject to the conditions that the IB: (1) registers with the Commission as a CTA; and (2) provides a Disclosure Document, as specified by Part 4 of the Commission’s regulations, to each of the third party trading system developer’s clients that have executed a “letter of direction.”
11/10/2005	05-19 ; Rules 4.21, 4.22 and 4.23;; No-Action The Division of Clearing and Intermediary Oversight granted exemptive relief from certain of the Part 4 rules 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 rules.
10/05/2005	05-18 ; Sections 4d and 4k(s);; No-Action Because of conflicting information provided to it, the Division of Clearing and Intermediary Oversight declined to consider a request for confirmation that registration is not required for an individual to receive ongoing payments in connection with past solicitation activity on behalf of various funds. The Division further advised that, in the event the interested parties are unable to agree as to the facts bearing on the registration question, they may elect to resolve their dispute in a court or other competent fact finding forum.
10/05/2005	05-17 ; Rule 166.4;; No-Action The Division of Clearing and Intermediary Oversight denied a request by a registered CPO/CTA that it be permitted to operate its branch office, a wholly-owned subsidiary of the CPO/CTA, as a separately incorporated entity. The Division denied the request because, in its view, allowing separately incorporated branch offices would frustrate a core purpose of Rule 166.4 – i.e., that Commission registrants be accountable for the acts and omissions of their branch offices. The Division further noted that this position is consistent with prior positions taken both by the Commission and the Division’s predecessor, the Division of Trading and Markets.
08/29/2005	06-04 ; Regulation 4.23;; No-Action The Division of Clearing and Intermediary Oversight (DCIO) granted a request from a commodity trading advisor (CTA) for exemption regarding composite presentation of the past performance of accounts traded by a trading principal of the CTA in his capacity as an associated person (AP) of a futures commission merchant (FCM). The accounts are not traded according to the CTA’s offered program and may be traded differently from each other, leading to material differences in their rates of return that would preclude their presentation in a single composite performance capsule. However, presenting the performance in additional separate performance capsules, perhaps as many as one capsule per account, would result in numerous performance capsules, overwhelming prospective clients with excessive amounts of data on accounts and a trading program that bears little, if any, relationship to the CTA’s trading program. In order to provide more meaningful disclosure to prospective CTA clients, DCIO determined that the CTA could present the principal’s accounts in an expanded capsule format that includes the range of data for each capsule element.