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All Letters

Date
All Letters
02/02/1995
95-09 PDF Image; Rule 4.7(b)(1)(ii); No-Action
A CTA may claim Rule 4.7 relief in connection with providing commodity interest trading advice to an accredited investor who is not a US person and not a "qualified eligible client" based upon, among other things, representations that the investor had a long-standing business relationship with an AP of the CTA and the CTA only advised Rule 4.7 clients
01/12/1995
95-10; Rule 3.12; Exemption
Individuals previously registered as principals of a CTA, who wish to become APs of that CTA, may be exempted from the registration requirements of Rule 3.12. Having previously filed Forms 8-R and fingerprint cards with NFA, the principals need only file Forms 3-R, updating their Forms 8-R, to register as APs, provided the CTA files a sponsor's certification for each of them
11/21/1995
95-100 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets took a no-action position that would allow a registered CPO to admit investors in a Pool who were not QEPs and continue to claim relief pursuant to Rule 4.7(a). The non-QEP investors were the Chief Administrative Officer of the CPO, and three trusts whose beneficiaries were family members of the managing member of the CPO and whose sole trustee was a QEP. The Division also took a no-action position that would allow the Pool to invest more than ten percent of its assets in other Rule 4.7 exempt pools even though certain investors in the Pool would be non-QEP investors.
11/21/1995
95-101; Sections 4m(l) of the Act; Interpretation
The Division of Trading and Markets confirmed that sellers and developers of commodity interest trading systems are within the statutory definition of CTA contained in the Act, and thus, such persons must register as CTAs. The_ Division also expressed its view that the Supreme Court's ruling in SEC v. Lowe did not mandate a broad reading of the exclusion from the CTA definition contained in the Act so as to exclude sellers or developers of commodity interest trading systems from registration requirements.
11/27/1995
95-102; Rules 4.21, 4.22 and 4.23(a)(10) and (a)(11); Exemption
A registered commodity pool operator is exempt from the requirements of Rules 4.21, 4.2 2 and 4.23(a)(10) and (a)(11), where all of the pool's participants are related to the CPO, subject to the conditions that: (a) the CPO file an Annual Report for 1995 because during that year the pool had participants who were unrelated to the CPO and (b) no unrelated persons participate in the pool.
11/21/1995
95-103; Act Section 4d; Rules 1.20 et seq.; Interpretation
The Division advised that neither the Commodity Exchange Act nor the Commission's rules promulgated thereunder would be violated if a registered investment adviser ("RIA") provided cash management services to futures commission merchants ("FCMs") with respect to segregated customer funds. Such services would include purchase and sale of instruments permitted by Rule 1.25, execution of reverse repurchase agreements and consummation of reverse repurchase transactions, all pursuant to limited power of attorney given under a written advisory agreement. The RIA would not handle customer funds, securities purchased with such funds, or proceeds of sales of such securities. Each individual FCM's customer funds would be separately accounted for, and the RIA's compensation would be paid directly by its client FCM, without use of customer funds.
07/27/1995
95-104; 1a(11); Interpretation
Letter of Off-Exchange Task Force confirms that certain contractual arrangements for the delivery of live hogs proposed to be offered by an agricultural cooperative are not futures or options contracts under the Commodity Exchange Act and Commission regulations thereunder.
11/30/1995
95-105; Rule 4.21(e)(2); Exemption
The Division permitted a registered CPO to continue using a pool's Disclosure Document for nine months from the date of the Document, instead of the six months provided in former Rule 4.21(e)(2), where (1) the pool was publicly offered pursuant to a registration statement filed with the Securities and Exchange Commission; (2) the pool's Disclosure Document was prepared in accordance with the Commission's former Part 4 rules; and (3) the Disclosure Document was filed with the Commission prior to the August 24, 1995, effective date of the Commission's revisions to the Part 4 CPO/CTA disclosure regulations. The adopting release for the Part 4 revisions provided that the Disclosure Documents prepared under the former Part 4 rules and filed prior to August 24, 1995, could be used for the six-month period of the former rules.
11/09/1995
95-106 PDF Image; 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.
11/22/1995
95-107 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets took a no-action position that would allow a registered CPO to admit investors in a Pool who were not QEPs and still claim relief pursuant to Rule 4.7(a). The non-QEP investors fell into two general categories and were either partners, employees or persons otherwise professionally linked to the CPO or trusts in which the trustees who had investment discretion were QEPs and closely related to the beneficiaries and/or founders of the trusts in question. The Division also took a no-action position that would allow the Pool to invest more than ten percent of its assets in other Rule 4.7 exempt pools even though certain investors in the Pool would be non-QEP investors.
11/27/1995
95-108 PDF Image; 4m(1) of the Act Rule 4.23; No-Action
Certain Directors not required to register as CPOs in connection with their operation of a Pool where, among other things: (1) Pool's Operator is a director of the Pool and will be registered as a CPO; (2) the Pool will be operated in compliance with Rule 4.7; (3) the non-registered Directors are "non-United States persons" except for two college professors who serve as Directors to aid in compliance with the Investment Advisers Act of 1940; (4) the Directors delegate to the Pool's Operator responsibility for the Pool's commodity interest-related activities and soliciting investors for the Pool; and (5) the Directors and the Operators are jointly and severally liable for any violations of the Act or the Commission's regulations thereunder. The Division also granted the Operator relief from certain requirements of Rule 4.23 with respect to the location of original books and records.
11/29/1995
95-109 PDF Image; CEA Section 4m(1), Rule 4.14(a)(8); No-Action
The Division took a "no-action" position with respect to failure to register as a CPO by a Luxembourg management company operating three identical Luxembourg investment funds (the "Funds") and failures to register as a CTA by the U.S. registered investment adviser providing commodity interest trading advice to the Funds, notwithstanding that (1) the Luxembourg management company was 99.98% owned by the U.S. investment adviser, and (2) several directors of the management company were U.S. persons and principals of the U.S. investments adviser and/or the adviser's U.S. parent. The Funds were marketed and sold exclusively to non-U.S. persons, all activities of the Funds were conducted outside of the U.S., no U.S. source provided capital to any of the Funds, none of the management company's U.S. directors engaged in or supervised commodity interest trading, none of the directors was subject to statutory disqualification, and the Funds would be operated in a manner consistent with Rule 4.5(c) (2). Continuing exemption under Rule 4.14 (a) (8) was granted to the U.S. investment adviser notwithstanding that providing commodity interest trading advice to the Funds would be inconsistent with Rule 4.14(a) (8)'s requirement to restrict advice to entities excluded from the "pool" definition, or which are qualifying entities under Rule 4.5.
02/09/1995
95-11 PDF Image; Rules 1.31, 1.33, 1.46, 4.32; No-Action
An FCM may provide a CTA, acting as an account controller, with confirmation and purchase-and-sale statements via electronic transmission only (i.e., without also providing such statements by mail in hard copy form), provided that: (1) the FCM continues to provide monthly account statements in hard copy form; and (2) the CTA maintains the electronically transmitted statements in accordance with the Rule 1.31 (d) standards for optical storage systems. This relief does not affect the requirement that FCMs must provide statements to customers in hard copy form
12/15/1995
95-110 PDF Image; Section 2(a); No-Action
No-Action letter allowing the Singapore International Monetary Exchange futures contract based on the Nikkei Stock Index 3 00 to be offered or sold in the United States.
01/26/1995
95-12; Rule 4.13(a)(2); Exemption
Explanation of the exemption from CPO registration in Rule 4.13(a)(2), for pools with total gross capital contributions under $200,000 and no more than 15 participants
01/17/1995
95-13 PDF Image; Rule 4.7; No-Action
An investor pool may be treated as a QEP, notwithstanding the presence of non-QEPs: (1) by the CPO of an investee pool in which the investor pool has been a participant for more than four years; and (2) by registered CTAs, who must have traded proprietary funds of the investor pool's CPO for a minimum of six months prior to being eligible to trade for the investor pool
02/15/1995
95-14 PDF Image; CEAct 4m(1); No-Action
Relief from CPO registration granted to a new general partner of a Rule 4.12(b) private investment limited partnership where the other general partners are registered as CPOs and the new general partner's responsibilities will be limited to financial administrative matters
02/17/1995
95-15; Rule 4.10(d); Interpretation
Confirmation that two private investment limited partnerships are not commodity pools under Rule 4.10(d) and, therefore, the general partners are not CPOs thereof, because alj of the participants are immediate family members
02/23/1995
95-16 PDF Image; Rule 4.14(a)(6); No-Action
Where a principal/AP of a registered introducing broker exercises discretionary authority over nine of the IB's 17 accounts, the IB will not be required to register as a CTA, provided it does not acquire any additional client accounts that the IB or the principal/AP would direct
03/03/1995
95-18 PDF Image; Rule 4.10(d); No-Action
A partnership in which all the partners are immediate members of the same family is not a commodity pool as defined in Rule 4.10(d) and, therefore, no partner is required to register as a CPO
02/24/1995
95-19 PDF Image; Rules 3.1(a), 3.10(a)(2); No-Action
(denied) - A CTA is required to list its corporate secretary as a principal of the CTA (and that person, like all corporate officers, must file a Form 8-R and a fingerprint card), even though the CTA claims that the corporate secretary performs only clerical functions
03/03/1995
95-20; Rule 4.10(d); Interpretation
A fund is not a pool under Rule 4.10(d) where: (1) the general partner is a registered CPO; (2) one of the limited partners is a registered CPO; and (3) the other limited partner has only a .04% interest in the fund and is operated by a registered CPO who has known the sole principal of the general partner for 25 years
03/07/1995
95-21; CEAct ?1a(4) and 1a(5), Rule 4.10(d) and 4.14(a)(5); Interpretation
A general partnership is not a commodity pool under Rule 4.10(d), and none of the partners is a CPO of the partnership, where, among other things: of the 14 partners, one is a long term advisor and the other 13 are immediate family members, or trusts those immediate family members beneficially own and for which they serve as trustees. Neither are any of the partners required to register as CTAs
03/10/1995
95-22 PDF Image; Rule 4.7; No-Action
A registered CPO may treat a pool as an exempt pool under Rule 4.7(a), where the sole non-QEP investor: (1) is an "accredited investor" under SEC Regulation D; (2) is a vice president of the CPO; and (3) has applied for registration as an AP of the CPO
03/13/1995
95-23 PDF Image; Rule 4.7; No-Action
A CPO may continue to claim Rule 4.7 relief for a fund, including the right to invest more than ten percent of the fund's assets in Rule 4.7 investee pools, notwithstanding the fund's acceptance of a non-QEP investor who is the managing director and a listed principal of the CPO
03/13/1995
95-24 PDF Image; CEAct 4m(1); No-Action
The new general partner of a Rule 4.12(b) private investment limited partnership is not required to register as a CPO where: (1) the other general partners are, or will be, registered as CPOs; (2) the new general partner's responsibilities will be limited to financial administrative matters; and (3) the new general partner will not exercise discretion, supervision or control over, or participate in, either (i) the solicitation, acceptance or receipt of funds or property to be used for purchasing interest in the partnership, or (ii) the investment, use or disposition of funds or property of the partnership
03/14/1995
95-25 PDF Image; Rule 4.5; No-Action
Three corporate affiliates of a bank holding company will not be required to register as CPOs with respect to their combined management, investment of assets, and sale of units, of a pooled investment vehicle organized as a Delaware business trust ("the Trust"), and will be allowed to operate the Trust under the provisions of Rule 4.5. Of the three affiliates: one acts as trustee, subject to state banking regulations; the second engages in sales and administrative activities with respect to the Trust, also subject state banking regulations; and the third, which acts as the Trust's investment manager, is registered as both an investment adviser with the SEC and a CTA with the CFTC
03/15/1995
95-26 PDF Image; CEAct 4m(1); No-Action
The operator of an offshore pool is not required to register as a CPO, where the operator is wholly owned by a U.S. person who is listed as the sole principal and is registered as an AP of a registered CPO and CTA
02/16/1995
95-27 PDF Image; CEAct 1a(5), 4m(1); No-Action
A company engaged in the business of acquiring mortgage loans and mortgage backed securities, subject to SEC regulation, is not required to register as a CPO where it will open commodities accounts only to hedge its interest rate exposure, and the aggregate funds to be deposited as original margin or option premiums will be limited to no more than one percent of the fair market value of the company's assets. Also, three company officers who will advise the company regarding this trading are not required to register as CTAs where they: (1) are not subject to statutory disqualification; (2) do not provide trading advice to any other persons; and (3) do not otherwise hold themselves out to the public as CTAs
03/13/1995
95-28 PDF Image; CEAct 4d, Rule 1 3(mm); No-Action
A natural person ("A") is a principal and sole owner of a registered corporate CPO, which has organized a pool. A is also an AP of a registered IB. The CPO will not be required to register as an IB also, even though the CPO, rather than A in his capacity as an AP of the IB, will receive as income certain commissions payable to A from the IB, relating to trades introduced for the pool
02/10/1995
95-30 PDF Image; CEAct 4m(l), Rule 4.5(c) (2); No-Action
An SEC registered broker-dealer with its principal office and place of business in Puerto Rico is not required to register as a CPO or CTA in connection with operating an investment company (the "Fund"), where: (1) certain restrictions are imposed on the Fund's investment activities; (2) the Fund is registered under the laws of Puerto Rico; (3) the Funds is organized in Puerto Rico and will be offered solely to residents of Puerto Rico; and (4) the Fund will use commodity interest contracts in a manner consistent with Rule 4.5(c)(2). Also, a financial institution chartered and having its principal office and place of business in Puerto Rico, which will jointly manage the Fund's investment portfolio and share authority to make investment decisions for the Fund, is not required to register as a CTA
12/05/1995
95-40 PDF Image; Rule 4.7; No-Action
A CPO may claim Rule 4.7 relief for a pool, where a trust, one of the participants in the pool, is not a QEP, but one of the two trustees is a QEP, provided that the trustees consent to the trust being treated as a QEP, and that the CPO files notice of a claim for exemption under Rule 4.7 and otherwise complies with the rule
03/16/1995
95-41 PDF Image; CEAct 4m(l), Rule 4.23(a); No-Action; Exemption
The foreign administrative general partner of a pool is granted relief from CPO registration where a second general partner, who is a registered CPO, runs the investment and trading program of the pool and co-signs an affidavit with the administrative general partner wherein each accepts joint and several liability for any CEAct violations by the other. Relief from registration is also conditioned on the fact that the one limited partner, although a U.S. person (because it is wholly owned by a US person), is a major institutional investor who is a QEP under Rule 4.7
03/23/1995
95-42 PDF Image; CEAct 4d, Rule 1.3(mm); No-Action
A CTA will not be required to register as an IB where, among other things, an FCM remits to the CTA a per-trade fee in satisfaction of a fixed yearly fee, which the CTA's sole non-discretionary client agreed to pay for trading signals and research. Relief is subject to the condition that the CTA does not accept compensation from any other client except in the form of incentive and management fees that are not remitted to the CTA on a per-trade basis
03/29/1995
95-43; Rule 4.20; Exemption
A corporate CPO, which will operate itself as a CPO, is exempted from the Rule 4.20(a) requirement that a CPO "must operate its pool ... as a legal entity separate from that of the pool operator," where: (1) each participant in the pool will be issued stock or other evidence of ownership; (2) the CPO does not operate any pools other than itself; (3) all funds the CPO receives from participants are received in the CPO's name; and (4) the CPO's bank accounts and custody account are not authorized to received funds or assets other than in the name of the CPO
04/20/1995
95-44 PDF Image; Rules 4.8, 4.12(b), 4.21(g)(1); Other Written Communication
(Advisory) - The "Instant Filing Advisory" will have the effect of substantially shortening the length of time it takes to process certain CTA and CPO disclosure documents. Disclosure documents that qualify for "instant filing" relief will be accepted upon filing
04/18/1995
95-46; Rule 4.32(a)(6); Exemption
A registered CTA does not have to maintain hard copies of client confirmation and purchase-and-sale statements when such statements are received from FCMs electronically and the CTA maintains the electronically-received statements on disk in accordance with Commission Rule 1.31(d)
04/26/1995
95-47 PDF Image; Rule 1.3(y); No-Action
An FCM may treat the accounts of its Directors, and the Directors of its parent, as customer rather than proprietary accounts where, among other things, the Directors do not participate in or supervise trading for the FCM or its parent, and each Director agrees to subordinate his claims to the claims of other customers in the event of the FCM's receivership or bankruptcy. The relief was granted in light of: (1) the apparent low volume of trading in the Directors' accounts; (2) the small number of Director accounts in comparison with total customer accounts; (3) the often short-term nature of a Director's tenure; and (4) the fact that Directors are generally long-standing customers of the parent and the FCM, who continue their customer relationship following the expiration of their terms as Directors
04/26/1995
95-48; Rules 1.14 and 1.15; Exemption
(Denied) - A request for an exemption from the Commission's risk assessment rules was denied where no grounds for an exemption were found to be presented
04/27/1995
95-49; CEAct 4o; Interpretation
A CTA who bunches client orders into a single order for execution must use a predetermined and fair system to allocate the variously priced fills among customers, such that no customer or group of customers receives consistently favorable or unfavorable treatment, if the CTA is to avoid liability under the antifraud provisions of the CEAct
03/15/1995
95-50 PDF Image; Rule 4.7; No-Action
A fund-of-funds QEP partnership may treat certain limited partners as QEPs, and so may invest more than ten percent of the partnership's assets in Rule 4.7 exempt pools, where all of the non-QEP limited partners: (1) are SEC Regulation D "accredited investors;" (2) are personally known to the general partners; (3) have been limited partners for at least the past five years; and (4) have consented to being treated as QEPs and to a waiver of the ten percent limitation
05/01/1995
95-51 PDF Image; CEAct 4d(1), Rule 1.3(mm); No-Action
An arrangement whereby an FCM offers a credit equal to 15 percent of its commission charges to its customers who are also customers of a particular information services company, and such credits are then used to pay for the information services, would bring the information services company within the definition of an introducing broker. However, because the information services company's activities also bring it within the definition of a CTA, and the purposes of the CEAct would not require it to register as both an IB and a CTA, the arrangement is permissible if the information services company registers as a CTA
05/02/1995
95-52; Rule 4.22(a)(1); Interpretation
Realized and unrealized gains and losses on regulated commodities transactions presented i the income statements or account statements of a commodity pool may be combined with realized or unrealized gains and losses, respectively, from the trading of non-CFTC-regulated instruments or contracts, provided that the gains and losses to be combined are part of a related trading strategy
03/13/1995
95-53 PDF Image; Rules 4.21(a)(4), (a)(5) and (f); No-Action
A registered CPO is granted relief from: (1) disclosing the past performance of another CPO at which one of its principals had been employed, where the principal's role, with both the former and the current CPO, is a limited one and the current CPO would include a discussion of the former CPO's performance results and make them available upon request; (2) disclosing the past performance of "less than ten percent" CTAs; and (3) including an Account Statement with the Disclosure Document, where the pool offers daily investment and redemption privileges, provided the Account Statement would be included with the confirmation of purchase
04/26/1995
95-54; CEAct ?4p(b), Rule 3.34; Interpretation
CEAct section 4p(b) and Rule 3.34 do not contain a "grandfather" clause and do not otherwise excuse a registrant from ethics training because of other licenses held or other training taken. Therefore, an AP, who undertook legal ethics and commodity futures regulation courses and testing in connection with his or her training and licensing as an attorney, is not exempt from the ethics training requirements
04/28/1995
95-55; Rule 4.10(d); Interpretation
A limited partnership and a limited liability company are not commodity pools under Rule 4.10, and the general partner and managers thereof, respectively, are not CPOs, where the partnership's partners and the company's members consist of 15 irrevocable and four revocable trusts beneficially owned by four siblings. The siblings are also the directors of the general partner and the managers of the company
04/28/1995
95-56; Rules 3.1(a) and 3.10(a)(2); Interpretation
A corporation serving as a general partner of a CPO that is formed as a general partnership is a principal of the CPO under Rule 3.1(a). Therefore, Rule 3.10(a)(2) requires that the CPO list the corporation as a principal on the CPO's Form 7-R and the CPO must file a Form 8-R and fingerprints on behalf of the corporation's sole owner, who is a natural person
04/12/1995
95-57; CEAct 4m(1); Interpretation
The developers of commodity interest trading systems are required to register as CTAs, where such systems are marketed by a registered IB to investors who open accounts with a registered FCM (the IB's guarantor) in which trades are made in response to signals generated by such systems. The IB and/or the FCM also may be engaged in activities requiring CTA registration
05/23/1995
95-58; Rule 4.10(d); Interpretation
A limited partnership, consisting solely of one individual general partner (registered as a floor trader) and one individual limited partner (registered as a floor broker), does not constitute a pool within the meaning of Rule 4.10(d), where the individuals have been business associates, and where the limited partner - an accredited investor with many years experience in the futures industry - placed at risk only his initial contribution and a share of his initial profits
05/26/1995
95-59 PDF Image; Rule 1.33; No-Action
An FCM with affiliates that are members of non-domestic futures exchanges may calculate and report to customers an average price with respect to trades executed on those non-domestic exchanges where: the trades are cleared at the actual execution prices; the non-domestic exchange does not prohibit average pricing; the customer requests average pricing and appropriate disclosure is made to all affected customers; the average price calculation procedures are consistent with those approved by the Commission in connection with exchange rules establishing average pricing systems; and the underlying records reflecting actual execution prices, average price calculations, and allocations are maintained at the FCM and are available for review by the Commission and affected customers
06/01/1995
95-60 PDF Image; CEAct 4p(b), Rule 3.34, Rule 3.12; No-Action
The Division of Trading and Markets granted relief from the Commission's four hour ethics training requirement for new registrants for two APs who had been registered prior to April 26, 1993. In this case, the APs became employed by a new firm and missed by seven days and five days, respectively, the sixty day transfer window afforded certain Commission registrants under Rule 3.12(d). In this case, the processing and finalization of the APs' forms 8-R were delayed due to a clerical error by the new firm.
06/27/1995
95-61; CEAct Section 4(c), 7 U.S.C. 6(c)(1994); 17 C.F.R. 35.1 (b)(2)(1994) - Definition of "eligible swap participant"; Interpretation
The Division of Trading and Markets provided clarification of the definition of 17 C.F.R 35.1 (b)(2), "eligible swap participant," adopted as part of Part 35, "Exemption of Swap Agreements," as the term applies to natural persons and corporations, and also to domestic and foreign persons.
06/21/1995
95-62 PDF Image; CEAct Section 4m (1) and Rule 4.31; Other Written Communication
The Division of Trading and Markets provided information as to the disclosure document delivery requirements with respect to a registered CTA who was previously exempt from registration pursuant to an exemption under Section m(l) of the Act
07/15/1995
95-63 PDF Image; Rules 1.35 and 155.3; No-Action
A registered investment advisor who is a limited partner of an FCM, and who is not involved in the operations and management of the FCM, may bunch customer accounts orders and FCM employee benefit account orders in which the investment advisor may have a minimal interest, for execution by and clearing through the FCM under limited circumstances
05/23/1995
95-64 PDF Image; CEAct Section 4m(1); No-Action
No enforcement action is recommended if a co-general partner fails to register as a CPO where the co-general partner and registered CPO makes all investment decisions for the funds; exercises discretion, supervision, and control over all offerings and solicitation; will solicit, accept, and receive the funds and property of the fund; and where the non-registered co-general partner has no direct or supervisory involvement in these activities
07/28/1995
95-65 PDF Image; Rule 1.17, CEAct Section (c)(5)(iii); Other Written Communication
Professional traders and market makers in options meeting certain conditions may qualify for a reduction in the 4% short option value charge, upon approval by a designated self-regulatory organization
07/19/1995
95-66 PDF Image; Rule 4.7(a)(1)(ii)(B)(2)(xi); No-Action
A no-action position was taken with respect to the 10% investment restriction in Rule 4.7 where a Rule 4.12(b) pool claiming exemption under Rule 4.7 ("Pool A") had as a participant another Rule 4.12(b) pool ("Pool B"), and Pool B had several non-QEP participants and more than 10% of its assets invested in Pool A. The Division also confirmed that, notwithstanding the conversion of Pool A from a Rule 4.12(b) pool to a Rule 4.7 exempt pool, Pool B could continue to multiply its investment in Pool A by 10% for purposes of determining Pool B's eligibility for exemption under Rule 4.12(b), based on pool A's representation that its commodity interest trading would continue to conform to the provisions of Rule 4.12(b), subsequent to Pool A's claim of exemption under Rule 4.7
07/26/1995
95-67 PDF Image; CEAct Section 4m(1); No-Action
The Division of Trading and Markets would not recommend that the CFTC take enforcement action against any registered investment adviser for failing to register as a CTA or CPO, when the requirement to register with eh CFTC is based solely upon the IA's providing investment advice to or exercising investment discretion on behalf of customers with respect to Chicago Mercantile Exchange foreign currency interests; or any registered investment company if such investment company does not register as a CPO when the requirement to register with the CFTC is based solely upon the ICs operating a collective investment vehicle that trades in CME foreign currency interests. This position, however, would not relieve registered investment advisors from the requirement to register as CPOs if they engaged in operating a commodity pool, and is subject to the condition that such persons claiming relief under this letter do not hold themselves out generally to the public as CTAs or CPOs
08/10/1995
95-68; CEAct Section 1a(5) and Rules 4.10(f), 4.14(a)(6) and 4.31; Interpretation
If an IB solicits and trades customer accounts pursuant to trade recommendations made by a newsletter, hotline, or computer software system (Third Party Advisor), the Third Party Advisor must register as a CTA. If the IB and the Third Party Advisor are operated as wholly independent entities, the IBs have no contractual, marketing, compensation or other arrangement or relationship with the Third Party Advisor and the IB has no authority to deviate from the Third Party Advisor's recommendations, the IB generally need not also register as a CTA. However, where the IB's activities with respect to a Third Party Advisor would require the IB also to register as a CTA, it would further be required to provide a disclosure document in accordance with Commission Rule 4.31 and Advisory 86-3.
07/12/1995
95-69; Rule 4.7(a)(2)(iii); Exemption
The Division of Trading and Markets granted a registered CPO a 45-day extension in which to comply with the annual report requirements of Rule 4.7(a)(2)(iii) where, among other things, Rule 4.7 pools traded through investments in other funds and participants could redeem their interests in the Rule 4.7 pools at least quarterly with 60 days notice.
08/14/1995
95-70 PDF Image; Rule 4.31; No-Action; Exemption
The Division of Trading and Markets exempted a registered CTA from the disclosure document requirements of Rule 4.31 where the CTA's sole client was an offshore commodity pool (the "Fund") which would have no participation by U.S. persons. In addition, the division took a CPO registration no-action position with respect to a British Virgin Islands company controlled by a U.S. company registered with the CFTC as a CPO, where the company served as co-CPO to the fund. The no-action position stipulated, among other conditions, that the U.S. registered CPO file Form 3-R naming the fund as a commodity pool to be operated by it; and the U.S. CPO and the company each provide written acknowledgement accepting joint and several liability for any violations of the Act or CFTC rules relating to their activity in connection with the fund.
08/16/1995
95-71 PDF Image; CEAct Section 4d, 7 U.S.C 6d(1994); Other Written Communication
A company that is a registered CTA, and A, an associated person and controlling person of the company, previously requested relief for the company from registration as an IB under Section 4d and the Division granted such relief, subject to certain conditions. Upon reconsideration, the Division reaffirms that as a condition to such relief, in order to protect customers who receive professional commodities services from A, when the compensation that A receives for such services is paid to the company controlled by A instead of to A in his capacity as employee of another entity, the Company must agree to be jointly and severally liable with the entities (or natural persons) from which A's services compensation or fees were paid
08/21/1995
95-72 PDF Image; Rule 4.7; No-Action
A charitable foundation may be treated as a QEP with respect to a pool where the charitable foundation's investment decisions are made by an individual who is QEP and has a net worth exceeding $25 million, more than 25 years of professional management experience, extensive experience with interest-rate arbitrage, a long-standing professional and personal relationship with the principals of such pool's CTA, and through this relationship, has detailed knowledge about such pool
08/24/1995
95-73; Rules 3.12(a) and 4.31; Exemption
Certain persons associated with a registered US CTA are exempt from registration as APs where such person are listed as principals of the CTA, are Canadian citizens, and will not solicit or direct any marketing efforts to, or accept any capital from, US persons. The registered US CTA also is exempt from the disclosure document requirements of Rule 4.31
08/30/1995
95-74 PDF Image; CEAct Section 2(a); No-Action
The Commission will take no action if futures contracts on the MIB 30 are traded on the Italian Stock Exchange Council's Italian Derivatives Market
06/06/1995
95-75; Rule 4.31; Exemption
A CTA that is advising a fund need not provide the fund's CPO with a disclosure document under Rule 4.31 where, among other things, the president of the CPO is an AP of the CTA and has access to all relevant information that would otherwise be provided to the CPO in the CTA's disclosure document
06/27/1995
95-76; Rule 3 .12 (h) (1) (iii); Exemption
(Denied) - Exemption from AP registration is denied for officers of a CPO/CTA which is unable to verify that ten percent or less of its total revenue comes from commodity interest related activities as required by CFTC rules
07/10/1995
95-77 PDF Image; CEAct Section 4m(1), Rules 4.5 and 4.14(a)(8); No-Action
The directors and the investment adviser of a fund, organized under the laws of Puerto Rico, need not register as CPOs and as a CTA, respectively, where (1) at least seventy-five percent of the directors of the fund will have their principal residences in Puerto Rico; (2) shares of the fund will be sold solely to persons who have their principal residences or places of business in Puerto Rico; (3) the fund is registered as an investment company under the Puerto Rico Investment Companies Act and, thus, is exempt from registration as an investment company under the Investment Company Act of 1940; (4) the fund will be operated in a manner consistent with Rule 4.5(c)(2); and (5) the investment adviser, which is registered under the Investment Advisers Act of 1940, will comply with the requirements of Rule 4.14(a)(8) with respect to the manner in which commodity interest trading advice is rendered to the fund
07/19/1995
95-78; CEAct Section 1a(5); Interpretation
A registered CTA is not acting as a CTA to a fund for which it serves as an investment adviser and provides only securities advice
07/21/1995
95-79 PDF Image; CEAct Section 4m(1); No-Action
Floor brokers who are also registered as associated persons of a commodity pool operator need not register as commodity trading advisers in connection with advice they are to render to a fund the CPO operates.
09/05/1995
95-80 PDF Image; CEAct Section 4m; No-Action
No action is taken with respect to the failure of two individual general partners of commodity pools to register as commodity pool operators where: (1) neither individual would exercise discretion or control over solicitation, investment, or disposition of pool funds or property, including commodity interest trading decisions; (2) the individuals would be listed as principals of a corporate general partner (and registered CPO) of the pools, and would submit to NFA background checks; and (3) each individual accepted joint and several liability with two existing general partners (who are registered as CPOs) for Commodity Exchange Act and Commission rule violations.
09/14/1995
95-81; Rule 4.7; Exemption
A CPO operating offshore pools that are "exempt" under Rule 4.7 may keep the books and records of the pools at their respective main business offices, rather than at the CPO's main business office in the U.S., where duplicates of such books and records will be kept by the CPO at its main business office and such books and records will be made available within 72 hours upon request by a Commission representative at the CPO's main business office.
09/19/1995
95-82; CEAct Sections 1a(5) and 4m(1) and Rule 4.14(a)(6) and 4.31; Interpretation
(1) An FCM or an IB engaged solely in the business of "guiding" customer accounts in engaging in a commodity interest advisory activity which is neither "solely in connection solely incidental" to no "solely in connection with" his business as an FCM or an IB, respectively, and this required to register as a CTA. (2) An IB that "guides" trading in a majority of its customer accounts must register as a CTA. (3) Rule 4.21(a) does not impose a duty to provide a disclosure document upon persons who are not "registered or required to be registered" under the Act as a CTA. (4) If an FCM's or IB's "guided account" activities do not require one to register as a CTA, no other written disclosures concerning one's guided account recommendations, beyond the "Risk Disclosure Statements" required by Rules 1.55 and 33.7 and all other information that is material in the circumstances, are necessary
09/20/1995
95-83 PDF Image; 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.
10/10/1995
95-84; Section 4m(1), 7 U.S.C. ?6m(1); Interpretation
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.
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; Interpretation
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
10/26/1995
95-86; CEAct Sections 4b and 4o); Interpretation
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
09/19/1995
95-87 PDF Image; CEAct Section 4m(1); No-Action
Where an FCM requested broad advice on whether its involvement with swaps and certain other derivatives transactions would require it to register as a CTA, the Division advised the FCM to review with counsel its activities and each derivatives transaction in question to determine first, whether such activities implicated the statutory definition of CTA, and if so, whether an exemption from registration, such as that contained in Part 3 5 of the Commission rules, would be available to it.
10/10/1995
95-88 PDF Image; 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
11/13/1995
95-89 PDF Image; 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
01/20/1995
95-8;; Rules, Part 30; Interpretation
Clarifies circumstances in which certain institutional customers of a US FCM may transmit orders directly to that FCM's foreign affiliate for execution on their behalf through the FCM's omnibus account. A previous CFTC Letter (No. 93-115) addressed circumstances in which the foreign affiliate had Rule 30.10 relief. This CFTC Letter applies to circumstances in which the foreign affiliate does not have Rule 30.10 relief
11/13/1995
95-90; Section 4m(1); Exemption
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
95-91 PDF Image; Section 4m(1); No-Action
No enforcement action recommended for failure to register as a CTA where: (1) the CTA is registered as an investment adviser; (2) the client would be an offshore fund with no US. persons as investors; and (3) the commodity interest trading advice would be privded ot the fund in a manner solely incidental to its business of providing securities advice to the fund, subject to the conditions that: (1) it does not otherwise act or hold itself out as a CTA; (2) the fund will be operated pursuant to the criteria of Rule 4.5(c)(2); and it will submit to such special calls as the Division may make of it to demonstrate compliance with the terms and condition of this "no-action" position
11/13/1995
95-92 PDF Image; Section 4m(1); No-Action
No enforcement action recommended against the investment general partner or the administrative general partner of an off-shore fund where, among othe rthings, the administrative general partner, whose duties and responsibilities are ministerial in nature, fails to register as a Co-cpo of the fund when the investment general partner is a registered cpo and that the fund will only be available to non-United States persons
11/16/1995
95-93 PDF Image; Section 4m(1) of the Act, 7 U.S.C. 6m(1)(1994); Rule 4.14(a)(5), 17 C.F.R. 4.14(a)(5)(1995); No-Action
The Division granted a person (A) no-action releif from registration as a commodity trading advisor (CTA) under Section 4m(1) of the Act when A was asked to provide commodity trading advisory services to a general partnership while continuing to advise a commodity pool for which A had filed a statement of exemption from registration as a commodity pool operator (CPO) under Rule 4.13(a)(2) nd with respect to which A had performed commodity trading adviosry services pursuant to Rule 4.14(a)(5). Each of the general partners of the partnership had more than 2 0 years of experience as an investor in the securities markets and was an accredited investor. The partnership had been in operation for several yars, had $10 million of funds under management which were the funds of the four general partners, and intended to enter into transactions in futures an doptions on futures contracts that would require the partnership to commit, as initial margin and premium, less than one percent of its funds
08/14/1995
95-94; Rule 4.31; Exemption
Relief from CTA disclosure document requirement granted to a registered CTA where: (1) the trading strategy being offered is otherwise only available to QECs for whom there is no disclousre document requirements; (2) the fund is an offshore entity comprised of only non-U.S. persons for whom no disclosure document is required; and (3) the CTA has no other clients for whom it is required to prepare a disclosure document
10/30/1995
95-95 PDF Image; 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; Exemption
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
10/10/1995
95-96; Rule 4.7(a)(2)(iii); Exemption
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
11/15/1995
95-97 PDF Image; 4m(1) of the Act; No-Action
International labor union granted releif form CPO registration with respect to operation of its "General Fund" containing operating revenues of the union where, among other things: (1) the union conducts its commodity trading activities solely for hedging purposes; (2) the General Fund will not commit more than five percent of its assets for initial futures margin or option premiums; (3) the union does not market the General Fund as a commodity pool; and (4) the union is not otherwise required to register with the Commission
11/15/1995
95-98 PDF Image; Section 4m(1) of the CEAct; No-Action
The "Common Members" of a company whose primary business is the issuance of guaranteed investment contracts ("CIGs") and which intended to issue equity interests to fifteen unaffiliated "institutional" accredited investors were not required to register as CPOs where, among other things, the Company will open commodity interest trading accounts for bona fide hedging transactions only to hedge its market risk exposure and will not deposit as initial margin of premiums for its commodity interest transactions an aggregate amount of funds greater than three percent of the liquidation value of the Company's outstanding GIC contracts. In addition, the Common Members of the Company advising the company with respect to commodity interest trading were not required to register as CTAs where the advisors are not subject to statutory disqualification, do not provide commodity interest trading advice to any other persons or otherwise hold themselves out generally to the public at CTAs.
11/22/1995
95-99; Rule 4.10(d)(1); Interpretation
The Division of Trading and Markets confirmed that a general partnership consisting of three partners who were business associates and industry professionals was not a commodity pool and, therefore, that no partner was a CPO.
12/11/1995
96-02; Rule 4.10(d)(1); Interpretation
The Division of Trading and Markets stated that a voluntary, non-contributory benefit plan established by a futures exchange ("Exchange") to reward certain of its members would not be a commodity pool as defined by Commission regulations and therefore neither the Board of Directors of the Exchange nor any designee thereof would have to register as a CPO in connection with the operation of the plan.
12/22/1995
96-05 PDF Image; Rule 4.7(b); No-Action
Relief granted to a registered CTA to provide commodity trading advice to a fund where the fund is an offshore entity comprised of only non-U. S. persons and is not otherwise eligible for QEC status and the CTA has no other clients that are not QECs; subject to the following conditions: (1) the fund is comparable in nature and purpose to one of the United States entities eligible for QEC treatment pursuant to Rule 4.7(b); (2) the fund has a portfolio with a minimum value of twenty-five million dollars; and (3) the fund consents in writing to being treated as a QEC.
12/11/1995
96-06; Rule 4.21, 4.22, 4.23(a)(10) and (11); and Rule 4.7(a); Exemption
Subject to certain conditions, the Division of Trading and Markets exempted a CPO from the reporting and recordkeeping requirements of Rules 4.21, 4.22 and 4.23(a)(10) and (11) in connection with its operation of a Fund in which all investors would be professional level employees of the CPO. The Fund would invest all its assets in a Rule 4.7-exempt pool (investee pool) operated by the CPO, the Fund investors would be involved in the operation of this investee pool. Among other things, the CPO agreed to provide employees who invest in the Fund with the periodic and annual reports of the investee pool and with an annual statement from the auditors of the investee pool stating the value of the Fund's investment therein; to allow investors access to books and records of the Fund and the investee pool; and to assure that the value of an individual employee's investment in the Fund did not exceed certain limits stated in terms of the employees yearly earnings from the CPO and overall net-worth. Finally, the Division granted no-action relief so that the investee pool could continue to invest more than ten percent of its assets in other Rule 4.7-exempt pools, although the Fund would not qualify as a QEP.
12/18/1995
96-07 PDF Image; Rule 1.57; No-Action
The Division adopted a no-action position with respect to a guaranteed introducing broker (GIB) and the guarantor futures commission merchant (GFCM) notwithstanding the fact that the GFCM would not necessarily be carrying and clearing all of the GIB's trades. Commission Rule 1.57 generally requires the GFCM to carry all of the GIB's customer accounts. In reaching this position, the Division noted, inter alia, that the GFCM had sufficient adjusted net capital and excess net capital to meet all of the GIB's obligations and that the GFCM agreed to be jointly and severally liable for all obligations of the GIB regardless of whether they were carried and cleared through the GFCM.
12/13/1995
96-08; Section 4m(l); Interpretation
Two offshore firms were granted CPO and CTA registration relief in connection with their operational and advisory activities in a U.S. pool, where among other things: (1) each of the approximately four investors will be a large federal or state regulated financial institution, or an affiliate thereof; (2) the minimum investment will be $100 million; (3) only proprietary funds will be invested; and (4) the fund through which the pool will trade commodity interests is operated by a registered CPO.
12/28/1995
96-09 PDF Image; Rule 33.3; Other Written Communication
The request of a registered CTA who is also an IB to confirm his opinion that he may withdraw his IB registration and continue to engage in certain commodity interest trading activities solely under his CTA registration is denied because the proposed activities appear to encompass solicitation of customer relationships on behalf of an FCM which is the usual course of business for an IB.
01/04/1995
96-10; Rule 4.7(a)(2)(iv); Exemption
Relief granted to a CPO from the requirement that a CPO must maintain books and records as specified in the rule at its main business office in connection with the CPOs operation of an offshore pool open only to QEPs.

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