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Interpretative Letters

Date
Interpretative Letters
01/07/1998
98-01 PDF Image; Part 35; Interpretation
The Division of Trading and Markets provided an interpretation of the availability of Part 35 relief for U.S. persons that qualify as eligible swaps participants who enter into swap agreements with non-U.S. financial institutions. The Division confirmed that as long as both the U.S. person and the non-U.S. financial institution qualify as eligible swaps participants, and all other conditions of Part 35 are met, then the swap agreement qualifies for treatment pursuant to Part 35.
01/22/1998
98-07 PDF Image; Section la(5) and 4k(3) of the Act - Registration Requirements for Entity Which Proposes to Start a Business Advising Farmers How to Hedge by Trading Futures; Interpretation
The Division of Trading & Markets provided interpretative advice to an entity that is seeking to start a business advising farmers "how to hedge, through trends and using futures." The entity advertises that its services are "designed for you and your farm." The entity purposes to provide its services to clients through the use of facsimiles, seminars and face-to-face interviews. The entity claims that it will not engage in any trading itself, nor recommend specific trades, nor refer clients to specific entities or individuals for the purpose of obtaining trading advice or other services. The Division advised the entity that it is required to register as a commodity trading advisor because the registration requirements are triggered not only when specific transactions are recommended but also when, as here, advice is given as the value or advisability of trading in futures or options. The Division also advised the entity that since the entity's employees responsible for soliciting clients will have not discretionary authority over any commodity interest trading accounts, these individuals will not have to register as APs.
03/25/1998
98-22 PDF Image; Rule 166.4 - Interpretative Advice for IB Operating as Branch Offices of Another IB; Interpretation
The Division of Trading and Markets (T&M) provided interpretative advice to an IB (IBl) that was no longer operating as an IB and was instead functioning as branch offices of another IB (IB2). IBl wanted to use its own name in conjunction with the name of IB2. IBl was functioning as branch offices of IB2 because IBl had lost its guarantor and could not meet the minimum capital requirements for operating as an independent IB. In interpreting the purposes and policies of the separate registration categories set forth in the Commodity Exchange Act and Rule 166.4, T&M determined that IBl was prohibited from using both names and from operating as separately incorporated branch offices of IB2. According to T&M, IBl had chosen to forego its separate IB identity in operating as branch offices of IB2. IBl, therefore, was required to forego its separate incorporation and registration status. In addition, all branch offices which the personnel of IBl were operating on behalf of IB2 must be exclusively identified for all purposes, including in all promotional and disclosure documents, as branch offices of IB2 - without reference to IBl.
11/25/1998
98-80 PDF Image; 4m(l); Rule 4.13; Interpretation
the Division confirmed that a director of an offshore fund need not register as a commodity pool operator based upon, among others, representations that the director: (1) although a United States citizen, maintained his permanent residence in Greece; and (2) would not solicit pool participants from within the United States. The Division exempted the registered commodity trading advisor of the fund from the requirement to deliver a Disclosure Document to the fund based upon representations that the advisor: (1) was wholly-owned by one of the three directors of the fund; and (2) had no United States persons as clients.
12/23/1998
99-01 PDF Image; Rule 1.57 (a); Interpretation
The Division of Trading and Markets (Division) expressed its view that, if an entity is registered as both a guaranteed introducing broker (IBG) and a commodity pool operator (CPO) and clearly separates its activities such that, when it is performing CPO functions, it is not also acting as an introducing broker, then the restriction of Commission Rule 1.57(a) would not apply with respect to a pool account. Rule 1.57(a) requires generally that an IBG introduce all customer accounts to its guarantor futures commission merchant on a fully-disclosed basis.
12/23/1998
99-02 PDF Image; Section 4d of the Act; Interpretation
The Division of Trading and Markets (Division) affirmed its previous interpretation that a party who refers potential customers either directly or by providing lists of names to a Commission registrant in return for direct or indirect compensation must register as an introducing broker (IB). The Division also confirmed that the IB registration requirements could apply to persons who sponsor futures related seminars that are attended by associated persons (APs) of Commission registrants and stated that permitting registrants to send APs to seminar for a fee in order to solicit other attendees may itself constitute a referral by a seminar sponsor.

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