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Interpretative Letters

Interpretative Letters
12-01 PDF Image; Regulations 4.34 and 4.35; Interpretation
The Division of Swap Dealer and Intermediary Oversight issued an interpretation regarding the time period for which past performance is required to be disclosed by persons required to register as CTAs because they engage in off-exchange retail foreign currency transactions (“retail forex”). Such persons (“Forex CTAs”) are required to disclose performance information for the period beginning October 18, 2010, the date upon which the Commission’s regulations governing retail forex became effective. A Forex CTA that chooses to present past performance information for any period of time prior to October 18, 2010 must do so in accordance with the time period as specified in Regulation 4.35(a)(5), must include all accounts directed by the Forex CTA, must present the information in the format specified in Regulation 4.35, and must have and maintain adequate books and records to substantiate the information.
12-07 PDF Image; Rule 140.98; Interpretation
The Division of Market Oversight issued an interpretation addressing whether, under Part 151 of the Commission’s regulations, an electric company may treat as bona fide hedging transactions certain derivative transactions that reduce the price risk associated with its unfilled anticipated requirements for natural gas, even though it has entered into some long-term, firm purchases of natural gas at an unfixed price. The interpretation notes that unfilled anticipated requirements may be recognized as the basis of a bona fide hedging position or transaction under Commission Regulation 151.5(a)(2)(ii)(C) when a commercial enterprise has entered into long-term, unfixed-price supply or requirements contracts as the price risk of such “unfilled” anticipated requirements is not offset by an unfixed price forward contract as the price risk remains with the commercial, even though the commercial enterprise has contractually assured a supply of the commodity. Instead, the price risk continues until the forward contract’s price is fixed; once the price is fixed on the supply contract, the commercial enterprise no longer has price risk and the derivative position, to the extent the position is above an applicable speculative position limit, must be liquidated in an orderly manner in accordance with sound commercial practices.
12-08 PDF Image; Regulation 39.13(g)(8)(ii); Interpretation
The Division of Clearing and Risk issued a letter interpreting Regulation 39.13(g)(8)(ii) (customer margin rule) to clarify that registered derivatives clearing organizations, in establishing customer initial margin requirements, may preserve historical practices by which customer initial margin requirements are based on the type of customer account and reflect the application of prudential standards that result in FCMs collecting customer initial margin at levels commensurate with the risk presented by each type of customer account.
12-13 PDF Image; Section 1a(10) and Commission Regulation 4.10(d); Interpretation
Request for Interpretation of the Definition of “Commodity Pool” under Section 1a(10) of the Commodity Exchange Act.
12-14 PDF Image; Section 1a(10) of the CEA and Commission Regulation 4.10(d); Interpretation
The Division of Swap Dealer and Intermediary Oversight issued an interpretative letter excluding certain securitization vehicles from the definition of commodity pool, subject to certain conditions.
12-17 PDF Image; 1a(18)(A); 2(e); 13(a); 17 C.F.R. § 23.430; No-Action; Interpretation
Interpretations and no-action positions related to ECP status.
12-19 PDF Image; Commission Regulations 4.5 and 1.3(z); Interpretation
The Division of Swap Dealer and Intermediary Oversight issued an interpretative letter that clarifies, in light of the recent vacatur of the position limits rule, the scope of the bona fide hedging exemption from the trading thresholds as applied to the operators of registered investment companies pursuant to Regulation 4.5.
12-27 PDF Image; Regulation 4.10(d)(1); Interpretation
The Division of Swap Dealer and Intermediary Oversight issued an interpretation that a limited liability company whose members were all family members was not a commodity pool within the meaning and intent of Regulation 4.10(d)(1) and, consequently, that the managing member was not a CPO thereof.
12-28 PDF Image; Regulation 22.2(d); Interpretation
Division of Clearing and Risk staff issued an interpretation providing clarification that while regulation 22.2(d) prohibits an FCM from permitting a lien on Cleared Swaps Customer Collateral that it holds, regulation 22.2(d) does not prohibit a Cleared Swaps Customer from granting a lien on his or her own account at the FCM, nor does the regulation prohibit the FCM from taking action to foster the Cleared Swaps Customer’s grant of such a lien.
12-31 PDF Image; Part 22; Interpretation
Staff Interpretation Regarding Part 22.
12-45 PDF Image; Parts 3 and 4 of the Commission’s Regulations; Section 1a(10) of the CEA; No-Action; Interpretation
The Division of Swap Dealer and Intermediary Oversight issued a letter providing additional guidance to securitization vehicles regarding whether they may be excluded from the definition of commodity pool. The Division also stated that it will not recommend that the Commission take enforcement action against the commodity pool operators of securitization vehicles that have not and will not issue new securities on or after October 12, 2012. Finally, the Division stated that, for securitization vehicles that could not claim relief either under this letter or the 12-14 Letter, it would not recommend enforcement action against operators of securitization vehicles for failure to register as a commodity pool operator until March 31, 2013.