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Interpretative Letters

Interpretative Letters
03-26 PDF Image; 1a(6) of the CEAct; Commission rules 1.33(bb), 4.14(a)(9) and 166.3; Interpretation
The Division of Clearing and Intermediary Oversight has determined that, where an associated person (AP) of an introducing broker (IB) creates a trading program that generates trading signals, and solicits clients solely to execute a "letter of direction" that provides that the IB should execute trades by following the program's signals "as close as reasonably possible," registration as a commodity trading advisor (CTA) is required of either the IB or the AP. DCIO stated that this scenario constituted managing a client's trading under an informal arrangement and, therefore, exemption from CTA registration under rule 4.14(a)(9) was not applicable. DCIO further stated that, if the IB registered as a CT, the AP would not also be required to register as a CTA in his individual capacity.
03-31 PDF Image; 4d(a)(2) of the CEAct, Regulation 1.20 and Regulation 30.7; Interpretation
A bank requested an interpretation that a deposit account product they developed would be acceptable for the deposit of customer segregated funds in accordance with Commission Regulation 1.20. Based on an analysis of the account, the Division issued an interpretation that the account would be acceptable as a deposit location as the account would be properly titled and covered by appropriate acknowledgements by the bank, and the funds in the account would at all times be immediately available for withdrawal on demand. The Division also confirmed that as the account was acceptable for the deposit of segregated funds, the account also was adequate to fulfill the requirements of Commission Regulation 30.7 with respect to secured amounts.
03-36 PDF Image; Regulation 32.13 (g); Interpretation
The Australian Wheat Board (AWB) seeks an interpretive letter authorizing its wholly-owned subsidiary, AWB (USA), Inc., to conduct over-the-counter trading, both as an offeror and an offeree of agricultural trade option contracts, in accordance with the exemptive provisions of Regulation 32.13(g). The letter finds that AWB's proposed option dealings, as described in its letter, would fall within the exemption.
04-01 PDF Image; Section 4(d)(a)(1); Interpretation
The Division of Clearing and Intermediary Oversight issued an interpretation that an intercompany arrangement between a registered securities broker-dealer (BD) and a registered FCM (each commonly-owned) that included assignment of commission income from the FCM to the BD so that the BD could make a single payment to employees of both firms does not require the BD to register as an FCM. The BD will not solicit or accept customer orders for futures or commodity option contracts, nor will it handle customer funds related thereto. Both companies share senior management, office space and support staff. The registered representatives of the broker-dealer are also APs of the FCM, and the BD will provide all employer-related administrative functions, including human resources functions, and consequently the payment of futures-related commissions to the APs of the FCM.