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
97-52 PDF Image; Rules 4.10(d)(1) & 4.7(a)(1)(ii)(B)(2)(viii);; No-Action
The Division confirmed that a limited partnership (the Partnership) formed solely to serve the investment purposes of the family of a QEP in which the limited partners of the Partnership will be members of the family and trusts established for the benefit of members of the family is not a commodity pool within the meaning and intent of Rule 4.10(d)(1) and, consequently, that the general partner of the Partnership is not a CPO thereof. In addition, the Division confirmed that the Partnership will qualify as a QEP pursuant to Rule 4.7(a)(1)(ii)(B)(2)(viii) because the Partnership will have total assets in excess of $5 million, will not be formed for the specific purpose of investing in a Rule 4.7(a) exempt pool and the Partnership is not a pool.
97-51 PDF Image; Rule 4.22(d);; No-Action
The Division of Trading and Markets granted the CPO of a commodity pool relief from the requirement of Rule 4.22(d) that the financial statements in the Annual Report that a registered CPO must prepare and distribute be certified by an independent public accountant. The CPO, who previously had claimed the exemption from CPO registration in Rule 4.13(a)(2), is the president and sole principal of a corporation that subsequently registered as a CPO. The commodity pool consists of eight limited partners who are all family members of the CPO and who receive detailed unaudited monthly reports and annual tax returns for the pool.
97-55 PDF Image; Rule 4.7(a)(2)(iv);; No-Action
The Division of Trading and Markets exempted a CPO from the requirements of Rule 4.7(a) (2) (iv) to maintain the original books and records for a pool at its main business office in the United States (U.S.) based upon the conditions that: (1) the CPO maintain duplicates of the pool's books and records at its main business office; and (2) within 72 hours after a request by a duly qualified representative of the Commission, the National Futures Association or the Department of Justice, the CPO make available originals of the pool's books and records to the representative at a place located in the U.S. as specified by the representative. The CPO maintained the pool's original books and records offshore to comply with the requirements of Irish law, under which the pool had been formed.
97-50 PDF Image; Section 4m(1) of the Act;; No-Action
The Division of Trading and Markets granted CPO registration "no-action" relief to the managing general partner of a general partnership that trades commodity futures contracts, where the investors are family members or business associates.
97-49 PDF Image; Section 4(m)(l), Rule 4.14(a)(6);; No-Action
The Division of Trading and Markets was unable to conclude a registered introducing broker (IB) could claim relief from registration as a commodity trading advisor (CTA) pursuant to Rule 4.14(a)(6) in connection with commentaries on the cash and futures agricultural markets which it provided through various media. The Division took this position in part because the IB charged a separate quarterly fee for some of the commentary services and offered the services generally to the public. Nevertheless, the Division took a CTA registration no-action position so that the IB would not be required to register as a CTA. The Division reasoned that since the IB did not exercise discretionary trading authority over any customer accounts, was already registered with the Commission and was a NFA member, the IB was already subject to most all regulatory requirements that would be applicable to it if it also registered as a CTA. The relief was conditioned on the IB's maintaining all applicable records under Rule 4.33 that would have been required of it if it remained registered as a CTA.
97-47 PDF Image; Section 4d(2) of the Act; Rule 190.10(c);; No-Action
The Division of Trading & Markets Financial and Segregation Interpretation No. 12 provides, among other things, that an FCM may not hold in a customer segregated account foreign currency deposited by a foreign-domiciled customer in connection with trading on U.S. markets unless the customer signs a subordination agreement as set forth in the Interpretation. The Division issued a no-action position concerning an FCM's failure to obtain such a subordination agreement, subject to the conditions that the FCM (1) continue to have no U.S. customers, and (2) provide notice to customers that in the event of the FCM's bankruptcy, all property available for customers will be subject to pro rata distribution.
97-46 PDF Image; Rule 1.17(c)(5)(iii);; No-Action
The Division of Trading and Markets modified CFTC Interpretive Letter No. 95-65, (1994-1996 Transfer Binder) Comm. Fut. L. Rep. (CCH) 26, 495 (July 26, 1995), to provide further no-action relief concerning the charge for short option value positions carried for customers by FCMs. This relief will now (1) be available generally for any customer account rather than only for the account of floor broker or floor trader (provided the FCM's liability to that customer does not exceed five percent of the FCM's total liability to all customers), and (2) require demonstration by an FCM that positions in issue are risk reducing only when applying for relief and thereafter upon request, rather than at every month-end. However, an FCM's DSRO must make sure a request (1) if the credit against the short option value charge is materially altered, and (2) as part of any full scope financial audit, which must be conducted every other year.
97-54 PDF Image; ?4m(1), 4.7(a);; No-Action
The Division of Trading and Markets took a no-action position regarding CPO registration relief for the sole general partner of two U.S. funds to be operated as Rule 4.7(a) pools where the CTA for both funds will also serve as the funds' CPO, the general partner and the CPO/CTA are affiliated companies, the general partner will limit its activities with regard to the two funds, and the CPO/CTA and the general partner accepted joint and several liability with each other for any violation of the Act or Commission regulations thereunder applicable to CPOs in connection with the two funds. In addition, the Division took a no-action position such that the CPO/CTA for the two U.S. funds, which also served as the CPO for an offshore fund organized as a Rule 4.7(a) pool, could claim exempt status under Rule 4.7(a) for all three funds despite the participation of eight non-QEP individuals in the three funds, where the eight non-QEPs are high level employees and sophisticated investors, and where the Division previously had deemed seven of them to be QEPs in connection with their investment in other funds not the subject of this letter.
97-44 PDF Image; 1a(14) and 4d(l) of the Act;; No-Action
No-action relief was granted from the requirement to register as an IB to a company selling a database of leads to registrants under the Commodity Exchange Act. The Company compiled a database of 5,000 individuals who had invested in publicly offered commodity pools and privately placed hedge funds from publicly available partnership filings in various county government recorder offices throughout the country. The only data added by the Company to the county records were telephone numbers obtained from a computerized telephone directory. Due to changes in partnership registration and recording requirements, no new names had been added to the database since 1992. The Company has no contact with the general public nor does it advertise for new leads or purchase any additional leads from other sources.
97-43 PDF Image; Rule 4.14(a)(6);; No-Action
The Division of Trading and Markets addressed the availability of the Rule 4.14(a)(6) exemption from registration as a commodity trading advisor (CTA) to introducing brokers (IBs) which manage customers accounts based upon commodity trading signals generated by systems developed by third parties (Third Party Advisors). The Division confirmed that when IBs enter into such arrangements, the registration status of the Third Party Advisor is a relevant factor to be considered in applying Rule 4.14(a)(6), but warned that if the Third Party Advisor is not registered as a CTA (but should be so registered), it may not be necessary to reach a determination under Rule 4.14(a)(6) since the IB may be violating the Commodity Exchange Act by aiding and abetting the Third Party Advisor in a violation of the CFTC's CTA registration requirements.