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
11/13/1995	95-90; ; Section 4m(1);; No-Action No enforcement action recommended if the general partner of a private investment limited partnership fails to register as a CPO of a fund, where the fund was formed to primarily trade in securities, where the sole limited partner is: (1) a QEP; (2) an attorney who specializes in the practice of securities and commodities law; (3) a certified public accountant; (4) a member of the board of directors of a NYSE listed company; and (5) sought out the general partner to form the limited partnership
11/13/1995	95-89 ; Section 4.13(a)(1) and 4.14(a)(8);; No-Action No enforcement action recommended if a registered investment adviser, as the general partner of a partnership created to test and validate various investment strategies, fails to register as a CPO where: (1) it will no receive compensation for operating the pool; (2) it will operate only one commodity pool; (3) it is not otherwise required to register with the Commission and is not a business affiliate of any person required to register with the Commission; and (4) the pool is not advertised. No enforcement action recommended if the registered investment adviser fails to register as a CTA in connection with commodity interest trading advice provided by the partnership if: (1) it will continue to be registered as an investment adviser; and (2) it will not be holding itself out as a CTA
11/09/1995	95-106 ; Rule 4.7(b);; No-Action The Division of Trading and Markets took a no-action position that would allow a registered CTA to treat certain foreign clients as qualified eligible clients, as that term is defined in Rule 4.7(b), if such foreign clients: (1) are analogous in nature and purpose to United States entities specifically eligible for QEC treatment pursuant to Rule 4.7(b) and (2) have portfolios with a minimum value of $25 million.
10/30/1995	95-95 ; Section 4m(1), 7 U.S.C. 6m(1); Section 4k(2), 7 U.S.C. 6k(2); Rule 4.21 (as amended by 60 FR 38146 - 17 C.F.R 4.21, 4.24 & 4.26), 4.22, 4.23 (as amended by 60 FR 38146 - 17 C.F.R. 4.23);; No-Action Three corporate affiliates (CI, C2 and C3) of a holding company and one natural person^ (PI) who acts in various capacities in connection with such affiliates (e.g., as director, officer, employee or agent) were granted no-action releif from registration as commodity pool operatos (CPOs). CI, C2, C3, a fourth corporate affiliate (C4) and PI organized and operate, or assisted in the organization and assist in the operation of, 21 commodity pools. The releif was granted based on various factors, including two common factors: (1) none of the pools had United States investors; and (2) none of the pools' participants were solicited in the United States. The request for relief from CPO registration with respect to CI, C2, C3 and PI was initiated as a result of Pi's determination both to reside and conduct his various buinsess activities in the United States at least eight months of each year. PI also requested, but was not granted, no-action relef from registration as an associated person (AP). Instead, PI was required to register as an AP of C4, a registred CPO located in the United States. PI is an officer of C4 and C4 is the United States business located from which PI conducts his United States-based business activities. For two of the pools: (1) C4 is required to be listed as the registered CPO;(2) C4 was granted certain exemptive relief from the disclosre, reporting and recordkeeping requirements of the Part 4 Rules; and (3) C4 was granted exemptive relief from the provision of Rule 4.34 requiring that original books and records be maintained at the offices of C4. With respect to the operation of the same two pools, C4 and one of the previously identified corporate affiliates (CI through C3) agreed to accept joint and several liability for any violation of the Act or the regulations committed by C4 or such affiliate
10/26/1995	95-86; ; CEAct Sections 4b and 4o);; No-Action The Division of Trading and Markets confirmed that sponsorship of a simulated trading contest on certain agricultural futures by an AP of a guaranteed IB would not violate any of the AP's obligations under the Act or Commission Rules if undertaken according to the rules represented by the AP. However, because the contest was a means for the AP to solicit potential business, the AP would be subject to the antifraud provisions of Section 4b of the Act. In addition, the Division conditioned its position on (1) the AP's providing contestants with statements concerning hypothetical trading, and (2) the IB, and the IB's guaranteeing FCM each providing written confirmations that they would be co-liable for any violations of Commission rules that may occur during the contest
10/12/1995	95-85; ; CEAct Sections 1a(5) and 4m(1) and Rules 4.14(a)(3), 4.14(a)(6) and 166.2;; No-Action Where an IB utilizes the trading signals generated by a Third Party Advisor's trading system to enter trades on behalf of a customer, then the IB generally need not also register as a CTA if the IB and the Third Party Advisor are operated as wholly independent entities, the IB has no contractual, marketing, compensation or other arrangement or relationship with the Third Party Advisor, the IB has no authority to deviate from the Third Party Advisor's recommendations and the Third Part Advisor is registered as a CTA. This is clearly the case where a customer independently selects a newsletter, trading system software or hotline and the IB does not solicit discretionary trading authority. However, if the IB makes use of the Third Party Advisor's services to solicit or maintain accounts if it has discretion with respect to the use of the recommendations of a Third Party Advisor, or other types of relationships between the IB and the IB and the CTA exist, the IB may be required to register as a CTA. 2) If an AP of an IB independently utilizes the signals of a Third Part Advisor on behalf of his customers, than an examination of factors similar to those examined in determining whether an IB must register as a CTA is appropriate. 3) A blanket verbal authorization directing an IB or AP to enter trades for each signal or recommendation generated by a customer's trading system or a Third Party Advisor's trading system or service is insufficient under Rule 166.2. The IB or AP must either obtain specific authorization to enter a trade upon receiving each signal or recommendations, or obtain written authorization to effect transactions for the customer's account without the customer's specific authorization. A letter from the customer directing the IB or AP to enter a trade for each signal or recommendation generated by the customer's system or a Third Party Advisor's system or service would appear to be written authorization as contemplated by Rule 166.2
10/10/1995	95-96; ; Rule 4.7(a)(2)(iii);; No-Action The Division granted registered CPO a ninety day extension in which to comply with the annual report requirements of Rule 4.7(a)(2)(iii) where, among other things: (1) the Rule 4.7 pool was a "fund of funds" and each of the three sub-funds that the pool invested in had received an extension of time from the Division in which to file annual reports; (2) investors would receive quarterly reports in a timely manner; and (3) investors would receive certified annual reports at least 75 days prior to the date on which a redemption notice is due
10/10/1995	95-88 ; Rule 4.7;; No-Action Limited partners of a commodity pool may be treated as QEPs where such persons are employed_ by the pool to "target" merger and acquisition opportunities, are accredited investors and have substantial backgrounds in the investment industry
10/10/1995	95-84; ; Section 4m(1), 7 U.S.C. ?6m(1);; No-Action A registered investment advisor (RIA) is not exempt from registration as a commodity trading advisor (CTA) under Section 4m(1) of the Act, where although the RIA proposed to advise or direct the trading of the accounts of 15 or fewer persons, the RIA held itself out as a CTA to such clients in the course of discussing with such clients the RIA's development of a model for trading in stock index futures and in soliciting a broad power of attorney pursuant to which the RIA would engage in trading in stock index futures in the accounts of such clients.
09/20/1995	95-83 ; Rule 1.31, CEAct Section 1.31;; No-Action The Division of Trading and Markets issued a no-action position which provided that subject to certain conditions, an FCM and its Japanese and Hong Kong affiliates could utilize the order transmittal procedures set forth in Interpretive Letter 95-8, despite the fact that Japan and Hong Kong laws do not permit the removal of original books and records from the home jurisdiction. The additional terms and conditions require, among other things, that upon request, authenticated copies of the foreign affiliates' original books and records be provided to the CFTC, and that the FCM and each of its relevant Japanese and Hong Kong affiliates undertake to provide access to original books and records at a designated location at the request of, among others, the CFTC.