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Interpretative Letters

Interpretative Letters
00-29 PDF Image; Section 4k(1); Interpretation
The Division of Trading and Markets determined that an employee of an IB fell within the clerical capacity exception to the AP registration requirement under Section 4k(1) of the CEAct because the employee's duties in connection with the solicitation and acceptance of customer orders were limited to giving price quotes and accepting customer orders for commodity interest contracts. The employee would not have any discretion over any of the IB's customer accounts, the employee would be paid on an hourly basis, and one of the IB's AP's would supervise the employee.
99-07 PDF Image; Section 4d of the Act; Interpretation
The Division of Trading and Markets (Division) issued an interpretation to a company that wished to enter into futures and options contracts on behalf of farmers as part of the company's proposed grain marketing and price hedging services that the company would likely be required to register as a futures commission merchant to offer the services as proposed. The company intended to enter the futures and options trades on behalf of farmers through a company account and to advance to the farmers the financing needed to margin these positions. The Division further noted that alternative ways of structuring the proposed services may trigger other registration requirements under the Commodity Exchange Act (Act). The Division also pointed out that if implemented as described, the services may violate provisions of the Act and Commission rules beyond those related to registration.
99-09 PDF Image; Division of Trading and Markets' Financial and Segregation Interpretation No. 4-1; Interpretation
SROs will no longer be required to file monthly reports of actions taken concerning subordinated loan agreements provided they maintain complete records available for Commission review.
99-10 PDF Image; Rule 4.14(a)(6); Interpretation
An introducing broker (IB) may rely on the exemption from commodity advisor registration in Rule 4.14(a)(6) where: (1) the IB directed trading in one of its twenty-three customer accounts; (2) the IB provided advice to its other customers solely through telephone discussions about current and publicly available market information; (3) the IB did not employ any advisory media such as hotline or computer program in connection with providing advice; and (4) no special facts or circumstances were present.
99-13 PDF Image; Advisory 93-13; Interpretation
An account funded at 90 percent or greater is not materially different from an account which is funded at 100 percent and thus may be treated as part of the fully funded subset method discussed in Commission Advisory 93-13.
99-21 PDF Image; Performance presentation requirements of Part 4 of the CEA; Interpretation
A CTA's trading performance should reflect gains and losses attributable to participation in the CTA's trading program or charged for the CTA's money management service. The performance presentation must not reflect income (such as imputed interest) or expenses not directly attributable to the CTA's trading. While the CTA may present information to a client in any manner that the CTA and client agree to, the performance information presented in the disclosure document must be calculated in accordance with CFTC regulations.
99-24 PDF Image; Division of Trading and Market's Regulation 1.17; Interpretation
Denial of request for waiver from including in liabilities the aggregate settlement amount entered into with NFA in calculating adjusted net capital.
99-32 PDF Image; Section 5a(a)(9) of the Commodity Exchange Act, Commission Regulation 1.52, and Division of Trading and Markets' Financial and Segregation Interpretation No. 4-1; Interpretation
The Division of Trading and Markets is issuing an interim Financial and Segregation Interpretation No.4-2 -- Risk-Based Auditing. The interpretation permits self-regulatory organizations to adopt a system of risk-based auditing for their member-Futures Commission Merchants.
99-44 PDF Image; Section 1(a)(5) - CTA Definition; Interpretation
The Division of Trading and Markets issued an interpretation that the statutory definition of the term "commodity trading advisor" would not be implicated with respect to an independent natural gas and electricity company, where the company intended to trade commodity interests to hedge price risk arising from its own commercial dealings - specifically, its purchases or sales of natural gas.