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
08/29/2005	06-03 ; Regulations 4.24 and 4.25;; No-Action The commodity pool operator (CPO) of a pool that was offered solely to employees of the CPO that participate in the CPO’s 401(k) plan requested exemption from including in a pool’s disclosure document the past performance of pools and accounts other than the offered pool. Where a pool has operated for three years or longer, and during that time at least seventy-five percent of the contributions to the pool have been made by persons unaffiliated with the pool operator, trading advisor, and their principals, the only required performance is that of the offered pool. Although this pool had operated for more than three years, it could not meet the seventy-five percent threshold due to the limitation on participation to the CPO’s employees. The purpose of the threshold for outside participation is “to assure that the three-year performance history would not represent the performance of a significantly dissimilar trading vehicle.” In this case, the composition of pool participants would not appear to cause the performance of the offered pool to be dissimilar in light of its being offered only to prospective participants who are similarly situated to the existing participants – i.e., employees of the CPO. DCIO provided the requested exemption on the condition that the CPO provides notice to its employees that performance disclosures for its other pools and accounts are available to any employee upon request.
08/26/2005	05-16 ; Sections 5 and 5a of the Act;; No-Action The Division of Market Oversight issued a letter granting no-action relief to permit Euronext Amsterdam N.V. to make its electronic trading and order matching system (LIFFE CONNECT®) available to Euronext Amsterdam 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 Euronext Amsterdam members trading for their own accounts; Euronext Amsterdam 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 LIFFE CONNECT® or accepting orders for U.S. customers transmitted via automated order routing systems for submission to LIFFE CONNECT®; and Euronext Amsterdam 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 LIFFE CONNECT®, provided that an FCM or Rule 30.10 Firm acts as clearing firm with respect to all activity conducted by such CPOs and CTAs through the submission of orders on LIFFE CONNECT®.
08/15/2005	05-15 ; Section 4m(1);; No-Action The Division of Clearing and Intermediary Oversight granted a request by a CPO for relief from the CPO registration requirement of Section 4m(1) of the Act with respect to a pool in which seven of the pool’s thirty-four participants are non-accredited investor. The relief was based upon representation made with respect to the nature of the non-accredited investors and representations that the pool would trade commodity interest solely for bona fide hedging purposes. The relief was further subject to the condition that the aggregate initial margin and premiums the pool commits to establish its commodity interest positions will not exceed one percent of the liquidation value of the pool’s portfolio.
08/15/2005	05-13 ; Rule 4.14 (a)(8);; No-Action The Division of Clearing and Intermediary Oversight affirmed that a registered investment adviser could claim CTA registration exemption under Rule 4.14(a)(8) with respect to certain of its advisory activities while simultaneously relying upon the CTA registration exemption provided by Section 4m(3) of the Commodity Exchange Act. For purposes of the letter, it was not necessary for the Division to define or otherwise interpret the criteria of Section 4m(3), or to make any determination whether the requester met those criteria.
07/25/2005	05-14 ; Commission Rule 1.14 and 1.15;; No-Action The Division of Clearing and Intermediary Oversight issued a letter denying a request from an FCM seeking relief from certain risk assessment reporting and recordkeeping requirements set forth in Commission Rules 1.14 and 1.15, respectively. Rules 1.14 and 1.15 set forth requirements which permit the Commission to obtain information concerning activities of FCM affiliates that could pose material risks to the FCM. In support of its request for relief, the FCM indicated that it has not conducted any futures brokerage activities since its inception and does not plan to conduct such activities in the future, and stated that, as a dually-registered BD/FCM, it files with the SEC a Form 17-H and makes available for inspection by the SEC all supporting documentation. The Division noted that the Commission, upon adopting the risk assessment rules, did not grant a complete exemption from Rules 1.14 and 1.15 for firms filing a Form 17-H with the SEC, and recognized that the risk management policies requirements pertain to activities involving instruments, such as securities or swaps, that are generally outside of the Commission’s transactional jurisdiction. The Division also noted that firms that are registered FCMs must comply with the regulatory requirements pertaining to FCMs, regardless of the extent, at any given time, of their involvement in futures-related activities. In conclusion, the Division determined that the FCM did not demonstrate special circumstances to justify granting the relief sought. The Division noted, however, that the FCM may continue to rely upon the exemption from certain provisions of Rules 1.14 and 1.15 applicable to those firms that file Form 17-H with the SEC.
06/28/2005	05-11 ; Section 4m(1);; No-Action The Division of Clearing and Intermediary Oversight took a no-action position with respect to the failure of a co-manager of a commodity pool (the Pool) to register as a CPO. Consistent with prior no-action letters, the other co-manager was a registered CPO, both co-managers were closely affiliated, and the unregistered co-manager would not participate in: (1) solicitation, acceptance or receipt of funds or property to be used for purchasing interests in the Pool; or (2) the investment, use or disposition of funds or property of the Pool. Neither co-manager was subject to statutory disqualification and each co-manager cross-acknowledged in writing joint and several liability for any violation of the Commodity Exchange Act or CFTC rules by the other co-manager.
06/03/2005	05-12 ; Rule 4.13(a)(2);; No-Action The Division of Clearing and Intermediary Oversight denied a request by a CPO for relief from the requirement of Rule 4.13(a)(2) that, for a CPO to be eligible to claim the CPO registration exemption available under that rule, none of the pools that the CPO operates may have more than 15 participants at any time.
05/20/2005	05-09 ; Rules 1.17 and 1.10;; No-Action The Division of Clearing and Intermediary Oversight (DCIO) issued a letter granting no-action relief to a futures commission merchant (FCM) that is also registered as a securities broker-dealer (BD) with the U.S. Securities and Exchange Commission (SEC), and who had been approved by SEC order to compute its 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. The FCM requested relief from Division staff allowing 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 letter, 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.
05/16/2005	05-08 ; Section 2(a);; No-Action Request for no-action relief in connection with the offer and sale in the United States of futures contracts based on the Taiwan Stock Exchange Electronic Section Index and the Taiwan Stock Exchange Finance Sector Index traded on the Taiwan Futures Exchange.
04/20/2005	05-07 ; Section 4m(1);; No-Action The Division of Clearing and Intermediary oversight took: (1) a CPO registration no-action position regarding an investment adviser (division of a bank and not required to register with the SEC) (the adviser) and the directors of a family of Puerto Rico investment companies (the funds); and (2) a CTA registration no-action position regarding the Adviser. Each of the Funds is registered under the Puerto Rico Investment Companies Act, has it principal place of business in Puerto Rico, and may be offered and sold only to the persons whose principal place of business or principal residence is in Puerto Rico. At least 75% of each Fund’s directors have their principal residence in Puerto Rico and none of the directors is subject to statutory disqualification under Section 8(a)(2) or (a)(3) of the CEA.