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All Letters

Date
All Letters
01/08/2002
02-04 PDF Image; Section 2(c) of the Act; Interpretation
The Division of Trading and Markets responded to an inquiry about the regulation of the foreign currency market by the operator of an investment club that limits its activities to the trading of foreign currency on an off-exchange basis. The Division indicated that the Commodity Futures Modernization Act of 2000 had amended the Commodity Exchange Act to make clear that the offering of off-exchange foreign currency futures and options contracts to retail customers is unlawful unless the counterparty is a regulated entity enumerated in the Commodity Exchange Act, such as a registered FCM. The Division noted that, generally, an investment trust, syndicate, or similar enterprise operated for the purpose of trading commodity interests is a "pool" and a person who operates a "pool" is a CPO and must register as such. However, with respect to a person that operates a "pool" that limits its trading activities to off-exchange foreign currency with a registered FCM acting as a counterparty under Section 2(c)(2)(B)(ii) of the Act, the person is not required to register with the Commission as a CPO, but may voluntarily do so.
01/08/2002
02-05 PDF Image; Section 2(c) of the Act; Interpretation
The Division of Trading and Markets responded to an inquiry about the regulation of the foreign currency market by a registered FCM offering trading in off-exchange foreign currency to retail customers. The Division indicated that the Commodity Futures Modernization Act of 2000 had amended the Commodity Exchange Act to make clear that the offering of off-exchange foreign currency futures and options contracts to retail customers is unlawful unless the counterparty is a regulated entity enumerated in the Commodity Exchange Act, such as a registered FCM. The Division noted that licensees of the FCM's software trading platform would not be affiliates of the FCM so as to qualify as one of the enumerated counterparties for retail foreign currency trading under the Act. Additionally, the Division indicated that the terms of the customer agreement between the licensees and the customers and the manner in which the licensees are operated, in particular the fact that the licensees operate under their own names without any reference to the FCM's role in the transactions and receive customer monies in the name of the licensees, have the indicia of the licensees being the counterparties to the retail customers. Accordingly, the Division stated that the licensees, to continue operating as they are currently, must be one of the enumerated counterparties under Section 2(c)(2)(B)(ii) of the Act. The FCM, in addition to offering trading to retail customers as counterparty, was also providing a second trading platform through which retail customers could trade directly with one another. The Division indicated that, to the extent that retail customers, trading through this second platform, become counterparties to one another, such transactions would fail to meet the requirement that the counterparty to a retail customer must be one of the entities enumerated under Section 2(c)(2)(B)(ii) of the Act and would, therefore, violate Section 4(a) of the Act.
01/24/2002
02-06 PDF Image; Regulations 4.21 and 4.22; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO from the disclosure, periodic, and annual reporting requirements of Rules 4.21 and 4.22 in connection with its operation of two master funds. Master Fund I has as it only participants two feeder funds also operated by the CPO. Master Fund II has as its only participant Master Fund I. The relief is subject to the conditions that: (i) the CPO remain the CPO of the Master Funds and the Feeder Funds, (ii) participation in Master Fund I is limited to the two Feeder Funds; (iii) participation in Master Fund II is limited to Master Fund I; and (iv) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Funds.
01/24/2002
02-07 PDF Image; Section 4m(1) of the Act; Rule 4.13(a)(1)(i); No-Action
The Division of Trading and Markets provided CPO registration no-action relief and confirmed the availability of CTA registration relief under section 4m(1) to an operator and the adviser, respectively, of a family fund. In so doing, the Division determined that one of the operators could not claim exemption from CPO registration under Rule 4.13(a)(1) because she received compensation as a principal of the fund's CTA.
02/05/2002
02-08 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets issued a no-action position concerning CTA registration to a producer of live video and audio signals over the Internet who proposed to contract with each of several designated contract markets to provide, for a fee, unedited live video and audio coverage of the trading action on the floor of the contract market, accompanied by only generic factual commentary.
02/14/2002
02-09 PDF Image; 4.22(d); Exemption
The CPO of a pool ceased trading in April 2001 closing the pool and the single investor's funds were distributed. The CPO requested exemption from the requirement of Rule 4.22(d) that the pool's 2001 Annual Report be audited. The participant submitted a statement in support of the exemption. The exemption was granted upon condition that an unaudited 2001 annual report be provided to the participant, NFA and CFTC.
02/19/2002
02-10 PDF Image; 4.22(d); Exemption
The CPO of a pool ceased trading in April 2001 closing the pool and liquidating the units of ownership. The CPO requested exemption from the requirement of Rule 4.22(d) that the pool's 2001 Annual Report be audited. The participants submitted statements in support of the exemption. The exemption was granted upon condition that an unaudited 2001 annual report be provided to the participants, NFA and CFTC.
08/21/2002
02-100 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight issued a CTA registration no-action position where the sole client was a commodity pool (the Fund) operated by a registered CPO and all of the participants in the Fund where the officers of the CPO: (1) had a minimum of three years experience at the CPO; (2) had a least five years of experience in trading commodity interests; and (3) were QEPs. The relief is subject to the conditions that the CPO remains: (1) the managing member and CPO of the Fund, and (2) registered as a CPO.
08/29/2002
02-101 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a fund that began trading late in the year requested exemption from filing an Annual Report for year ending December 2001. The exemption was based on the fact that the 2002 Annual Report will cover the entire operating history of the fund through January 15, 2003.
08/29/2002
02-102 PDF Image; Regulations 4.21 and 4.22; Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to CPO X from the Disclosure Document delivery requirement and periodic and annual reporting requirements of Rules 4.21 and 4.22, respectively, in connection with its operation of a master fund that has as its sole participants two feeder funds. CPO X serves as the CPO of one of the feeder funds and CPO Y serves as the CPO of the other feeder fund. Both CPOs share the same owners. Relief is subject to the conditions that: (i) CPO X and CPO Y remain the CPOs of the respective funds, and the owner of CPO X and CPO Y remain the same; (ii) participation in the Master Fund is limited to the feeder funds and other funds for which either CPO or CPO Y are the CPO; and (iii) the annual reports of the feeder funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
08/21/2002
02-103 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight issued a CPO registration no-action position to certain Market Maker firms whose sole commodity interest trading would be in security futures products, on a proprietary basis. This position was based upon, among others, representations that each firm: was registered as a broker/dealer with the SEC; was a member of a national securities exchange; was comprised of specified persons; and was not subject to a statutory disqualification under the CEAct. The Division issued a CTA registration no-action position to the Traders of these firms based upon similar representations. To obtain this relief, however, a Market Maker must file a Claim with the Commission which, among other things, permits the Commission to inspect the Market Maker's books and records to confirm the availability of the relief and requires the Market Maker to annually update the Claim.
10/02/2002
02-104 PDF Image; Section 2(c)(2)(B); Interpretation
The Division of Clearing and Intermediary Oversight provided an interpretation that a registered FCM who limits its activities to acting solely as a counterparty under Section 2(c)(2)(B)(ii) of the Act for foreign currency transactions conducted on an off-exchange basis, would not be subject to CFTC Rule 1.33. The Division noted, however, that the FCM remains subject to certain provisions of the Act as set forth in Section 2(c)(2)(C) of the Act, including the relevant antifraud provisions.
10/08/2002
02-105 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a pool, which ceased trading on June 30, 2002, requested exemption from the requirement of Rules 4.22(c) and (d) that the pool's 2002 Annual Report be audited. The participants submitted consent waiver statements in support of the exemption. The CPO has submitted unaudited statements for January 1 through June 30, 2002. The exemption was granted.
09/30/2002
02-106 PDF Image; Rule 30.4(a) and (b); No-Action
The Division of Clearing and Intermediary Oversight issued a letter granting no-action relief in the case of a foreign bank's affiliate that has been granted an exemption from registration as a futures commission merchant pursuant to Commission Rule 30.10. The relief permits the employees of a U.S. branch of the foreign bank to refer bank customers located in the U.S., on an unsolicited basis, to the bank affiliate with the Rule 30.10 exemption for purposes of engaging in foreign futures and options trading, without the foreign bank or the U.S. branch having to register with the Commission as a futures commission merchant or introducing broker.
10/30/2002
02-107 PDF Image; Rule 4.5; Other Written Communication
The Division of Clearing and Intermediary Oversight advised a requestor that action on its request for relief from the non-hedge trading limitation of Rule 4.5 was no longer necessary in light of the Commission's recent "no-action" position. See 67 Fed. Reg. 65743 (October 28, 2002).
11/14/2002
02-108 PDF Image; Regulations 4.7(b)(1), 4.7(b)(2), and 4.7(b)(3); Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to a registered COP from the disclosure and periodic and annual reporting requirements of Rules 4.7(b)(1), 4.7(b)(2), and 4.7(b)(3) in connection with its operation of a master fund that has as its sole participants two feeder funds that are also operated by the COP. The relief is subject to the conditions that: (I) the COP remain the COP of the Master Fund and the Feeder Funds; (ii) participation in the Master Fund is limited to the Feeder Funds, and any fund for which the COP is the sole COP; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
10/30/2002
02-109 PDF Image; Regulations 4.21 and 4.22; Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to COP X from the Disclosure Document delivery requirement and periodic and annual reporting requirements of Rules 4.21 and 4.22, respectively, in connection with its operation of a master fund that has as its sole participants two feeder funds. COP X serves as the COP of the master fund and one of the feeder funds and COP Y serves as the COP of the other feeder fund. Both Cops share the same owners and mangers. Relief is subject to the conditions that: (I) COP X remains the COP of the master and one of the feeder funds; (ii) Cops X and Y have the same management and ownership; (iii) Y remains the COP for the other feeder fund; (iv) participation in the master fund is limited to the feeder funds or any fund in which X or Y, or both, are the sole Cops; and (v) the annual reports of the feeder funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
02/25/2002
02-11 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a small fund requested exemption from filing a certified Annual Report for year ending December 2001. The participants submitted statements in support of the exemption. The exemption was based on the size of the fund, the closely held nature of the fund and the fund was not soliciting or accepting new participants.
11/22/2002
02-110 PDF Image; Rule 4.22(f); Exemption
A CPO has requested an extension of time to file its annual report for the fund it operates. The independent accountant for the Fund has informed the CPO that the audited financial statements will be delayed due to the accountant's inability to obtain from the offshore administrator information needed to complete the audit in a timely manner.
11/22/2002
02-111 PDF Image; Rule 4.22(c) and (d); Exemption
The CPO of a pool that closed requested exemption from the requirements of Rule 4.22(d) that the pool's 2001 Annual Report be audited. An unaudited statement for the operating period was submitted. The exemption was granted due to the small size of the Pool and the small number of participants in the Pool.
11/20/2002
02-112 PDF Image; Regulations 1.3(k) and 1.3(y); Interpretation
The Division of Clearing and Intermediary Oversight provided an interpretation that an account for an FCM carried on the books of another registered FCM, in which the carrying FCM receives, in lieu of commissions, a portion of the profits of the other FCM, but is not the owner of the account or the account holder, would not fall within the definition of a proprietary account under Commission Rule 1.3(y). The account would, instead, be carried as a customer account, subject to the sections of the Act and Commission Rules applicable to such accounts.
11/19/2002
02-113 PDF Image; Rule 4.7; No-Action
The Division of Clearing and Intermediary Oversight took a no-action position further expanding the class of persons eligible to participate in certain investment funds operated by a registered FCM and broker-dealer as an incentive for the FCM/Broker-dealer's partners and senior management employees. The Division had previously permitted non-QEP managing directors and limited partners to participate, and the instant no-action position confirmed the prior relief while permitting additional classes of accredited investor employees and consultants of the FCM/Broker-dealer and their family members to participate. Each participant's investment could be no more than 15 percent of salary for the pervious year. Each investment fund would commit no more than 10 percent of its assets to commodity interest trading. All financial reports required by Rule 4.7 would be provided to participants and the relief was conditioned upon each eligible participant having reasonable access to the fund's books and records, with the opportunity to ask questions and receive answers concerning the fund's operation and investments.
11/22/2002
02-114 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took a CTA registration no-action position with respect to a firm that sought to recommend investments for commodity interest accounts. The position was based, among other things, on the fact that in connection with the firm's registration as an introducing broker, each of its principals were listed as such and each of its associated persons were registered as such with the Commission, and the fact that the accounts and the investors in the accounts would all be QEPs.
11/27/2002
02-115 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to a registered investment adviser in connection with providing investment management services to a Canadian non-contributory pension plan established by a Canadian corporation for the benefit of its employees and subject to the requirements of the Ontario Pension Benefits Act.
02/25/2002
02-12 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a small fund requested exemption from filing a certified Annual Report for year ending December 2001. The participants submitted statements in support of the exemption. The exemption was based on the size of the fund, the closely held nature of the fund and the fund was not soliciting or accepting new participants.
02/27/2002
02-13 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested permission to provide quarterly reports to participants, as required by Rule 4.7(b)(2), 45 calendar days after the end of the reporting period, rather than 30 calendar days after the quarter-end. The exemption was granted based on the fact that, after substantial efforts were made and due to reasons beyond the control of the CPO, the financial information could not be received earlier from the offshore sub-funds.
02/27/2002
02-14 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested permission to provide quarterly reports to participants, as required by Rule 4.7(b)(2), 45 calendar days after the end of the reporting period, rather than 30 calendar days after quarter-end. The exemption was granted based on the fact that, after substantial efforts were made and due to reasons beyond the control of the CPO, the financial information could not be received earlier from the offshore sub-funds.
02/27/2002
02-15 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested permission to provide quarterly reports to participants, as required by Rule 4.7(b)(2), 45 calendar days after the end of the reporting period, rather than 30 calendar days after quarter-end. The exemption was granted based on the fact that, after substantial efforts were made and due to reasons beyond the control of the CPO, the financial information could not be received earlier from the offshore sub-funds.
02/27/2002
02-16 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested permission to provide quarterly reports to participants, as required by Rule 4.7(b)(2), 45 calendar days after the end of the reporting period, rather than 30 calendar days after quarter-end. The exemption was granted based on the fact that, after substantial efforts were made and due to reasons beyond the control of the CPO, the financial information could not be received earlier from the offshore sub-funds.
02/27/2002
02-17 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested permission to provide quarterly reports to participants, as required by Rule 4.7(b)(2), 45 calendar days after the end of the reporting period, rather than 30 calendar days after quarter-end. The exemption was granted based on the fact that, after substantial efforts were made and due to reasons beyond the control of the CPO, the financial information could not be received earlier from the offshore sub-funds.
03/05/2002
02-18 PDF Image; Rule 4.7; Exemption
The registered CPO of a pool that terminated early January 2002 requested, under Rule 4.7, permission to file a single and final audited annual report for the period February 1 through January 16, 2002, rather than two reports. The extension was granted.
03/05/2002
02-19 PDF Image; Rule 4.22(f)(1); Exemption
The registered CPO of a pool requested, under Rule 4.22(f)(1), an extension to file its audited report. Due to internal administrative and procedural issues involving the CPO's administrator, financial information and supporting information necessary to support substantive testing of the financial statements has been delayed. The extension was granted until March 15, 2002.
02/27/2002
02-20 PDF Image; Regulations 4.23 and 4.33; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO and CTA from the books and records location requirements of Rules 4.23 and 4.33 such that the CPO/CTA may maintain its books and records at the main business office of an affiliated company that provides operational support to the CPO/CTA. The relief is subject to the conditions that: (1) the CPO/CTA notify the Division if the location of any of the books and records required by Rules 4.23 and 4.33 changes from that as represented to the Division; (2) the CPO/CTA remains responsible for ensuring that all books and records required by Rules 4.23 and 4.33 are maintained in accordance with Rule 1.31 and for assuring the availability of such records to the Commission, NFA, or any other agency authorized to review such books and records in accordance with the Act and Commission regulations; (3) within forty-eight hours after a request by a representative of the foregoing, the CPO/CTA will obtain the original books and records and provide them for inspection at its main business office; and (4) the CPO/CTA discloses in its Disclosure Documents the location of all books and records required under Commission regulations 4.23 and 4.33. The exemption is further subject to the condition that the CPO/CTA remains fully responsible for compliance with Rules 4.23 and 4.33.
03/01/2002
02-21 PDF Image; Section 4m(1) of the CEA; No-Action
The Division of Trading and Markets took a CPO registration no-action position with respect to two of three general partners of a commodity pool organized as a limited partnership where, among other things: (1) the other general partner was registered as a CPO and served as the managing general partner; (2) the no-actioned general partners were not subject to a statutory disqualification and their members were listed as principals of the registered CPO; and (3) the general partners agreed to joint and several liability for their CPO activities.
03/08/2002
02-23 PDF Image; Rule 4.22(d); Exemption
The CPO of a pool that closed requested exemption from the requirement of Rule 4.22(d) that the pool's 2001 Annual Report be audited. The participants supported the request. The exemption was granted under the condition that the 2002 Annual Report cover the full 15 months the pool has been in operation.
02/27/2002
02-24 PDF Image; Sections 5 and 5a of the Act; No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit the Bourse de Montreal, Inc., to make its electronic trading and order matching system, known as Systeme automatise de Montreal (SAM), available to its Approved Participants in the U.S. without obtaining contract market designation or registering as a derivatives transaction execution facility pursuant to Sections 5 and 5a of the CEA.
03/13/2002
02-25 PDF Image; Rule 4.22(d); Exemption
The CPO of a pool that was capitalized in December 2001 requested exemption from the requirement of Rule 4.22(d) that the pool's 2001 Annual Report be audited. The participants supported the request. The exemption was granted.
03/05/2002
02-26 PDF Image; Regulations 4.21 and 4.22; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO from the periodic and annual reporting requirements of Rules 4.21 and 4.22 in connection with its operation of a master fund that has as its sole participants two feeder funds that are also operated by the CPO. The relief is subject to the conditions that: (i) the CPO remain the CPO of the Master Fund and the Feeder Funds; (ii) participation in the Master Fund is limited to the Feeder Funds, and any fund for which the CPO is the sole CPO; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
03/21/2002
02-27 PDF Image; Sections 4e, 4k(5) and 4f(a)(3); Interpretation
A registered securities exchange asked for confirmation that its members who are individual traders and executing brokerage firms and meet the requirements of Sections 4k(5) and 4f(a)(3) of the Act, respectively, are, therefore, exempt from the registration requirements of Section 4e of the Act. Regarding individual traders, the Division confirmed that, if the traders are associated persons of registered securities broker-dealers (BDs), as represented in the request, and limit their solicitation, acceptance, execution, or placing of orders on behalf of others involving futures contracts, or options thereon, to security futures products, then they meet the requirements of Section 4k(5) of the Act and, therefore, are exempt from, among other provisions, Section 4e of the Act. Additionally, the Division confirmed that, if the executing brokerage firms are, as represented in the request, BDs registered with the SEC and such registration has not been suspended pursuant to an order of the SEC and they limit their activities on behalf of others involving futures contracts to security futures products, then they meet the requirements of Section 4f(a)(3) of the Act and, accordingly, they are exempt from the registration requirements of Section 4e of the Act.
03/25/2002
02-28 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a small fund requested exemption from filing an Annual Report for year ending December 2001. The participants, all principals of the CPO, submitted statements in support of the exemption. The exemption was based on the closely held nature of the fund.
03/08/2002
02-29 PDF Image; Sections 5 and 5s of the Act; No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit the MEFF Sociedad Holding de Productos Financieros Derivados S.A., which wholly owns MEFF Sociedad Rectora de Productos Financieros Derivados de Renta Variable (MEFF RV) and MEFF Sociedad Rectora de Productos Financieros Derivados de Renta Fija (MEFF RF), to make its electronic trading and order matching system, known as MEFF S/MART, available to MEFF RV and MEFF RF members (including members of the Chicago Mercantile Exchange who are granted the right of access to MEFF contracts pursuant to the GLOBEX? Alliance Agreement) in the US without obtaining contract market designation or registering as a derivatives transaction execution facility pursuant to Sections 5 and 5a of the CEA.
04/04/2002
02-30 PDF Image; Rule 4.22(f)(1); Exemption
A registered CPO requested, under Rule 4.22(f)(1), an extension of time to file its audited report. The Fund is an entity domiciled in Luxembourg with records also maintained in London and the United States. The Fund's auditors are now required to comply with financial reporting requirements of multiple jurisdictions, including U.S. GAAP. Based on supporting documentation, the request for relief was granted for the CPO until June 30, 2002.
04/04/2002
02-31 PDF Image; Rule 4.22(f)(1); Exemption
A registered CPO requested, under Rule 4.22(f)(1), an extension of time to file its audited report. The fund transferred and reorganized from an entity domiciled in the United States to a new entity domiciled offshore. The Fund has new auditors and are now regulated by other jurisdictions with different financial reporting requirements. Based on supporting documentation, the request for relief was granted for the CPO until June 29, 2002.
03/27/2002
02-32 PDF Image; Rule 4.22.(F)(1); Exemption
A registered CPO requested, under rule 4.22(f)(1), an extension of time to file its audited report. The CPO did not have the audited reports of investee pools and had been informed that the reports would not be available prior to late May 2002. The CPO submitted a statement from the pool's accountant and provided information regarding the investee pools. Based on supporting documentation, the request for relief was granted for the CPO until June 15, 2002.
03/27/2002
02-33 PDF Image; Rule 4.22(f)(1); Exemption
A registered CPO requested, under Rule 4.22(f)(1), an extension of time to file its audited report. The CPO did not have the audited reports of three investee pools and had been informed that the reports would not be available prior to late May 2002. The CPO submitted a statement from the pool's accountant and provided information regarding the investee pools. Based on supporting documentation, the request for relief was granted for the CPO until June 30, 2002.
04/04/2002
02-34 PDF Image; Rule 4.22(f)(1); Exemption
A registered CPO of a pool requested an extension to file its audited report for the pool's fiscal year ending December 31, 2001. Pool is in process of final liquidation and CPO requested an exemption from filing under the condition that a final certified audit covering the entire nine-month operating history be filed when completed. The extension was granted conditioned on the CPO filing a non-certified annual report.
04/04/2002
02-35 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a small fund that began trading late in the year requested exemption from filing an Annual Report for year ending December 2001. The participants submitted statements in support of the exemption. The exemption was based on the closely held nature of the fund and the fact that the 2002 Annual Report will cover the entire operating history of the fund.
04/05/2002
02-36 PDF Image; Rule 4.22(f)(1); Exemption
Two pools invested in collective investment vehicles that are eligible for relief under Rule 4.22(f)(2) of the Commission's regulations, and that, as a consequence of these investee funds having relief to file their Annual Reports, until May 31, 2002, needed additional time to prepare and file their annual reports. This need for additional time, until June 28, 2002, is confirmed in the independent public accountant's letter accompanying their letter.
04/05/2002
02-37 PDF Image; Rule 4.22(f)(1); Exemption
The Funds are subcompartments of a foreign based registered corporate investment structure. Further, because the Fund is a foreign-domiciled Fund the audit process includes a two-step verification process involving parties from the U.S., where the day-to-day activities are handled, and the foreign country, who are required to have sign-off of the audit. This added complexity when combined with the complete closure and de-registration of the pool operator necessitates an extension of April 30, 2002.
04/02/2002
02-38 PDF Image; Section 2(a); No-Action
Eurex Deutschland's request for no-action relief in connection with the offer and sale of its futures contracts based on the Dow Jones STOXX 600 Banking Sector Index and Dow Jones EURO STOXX Banking Sector Index in the United States.
04/09/2002
02-39 PDF Image; Rule 4.22(f)(1); Exemption
Where pool's are invested in collective investment vehicles that are eligible for relief under Rule 4.22(f)(2) of the Commission's regulations, and that, as a consequence of these investee funds also having 4.22(f)(2) relief to file their Annual Reports, until May 31, 2002, additional time is granted to prepare and file the report for the Pools. This need for additional time was confirmed in the independent public accountant's letter accompanying your letter.
04/09/2002
02-40 PDF Image; Rule 4.22(f)(1); Exemption
Where a pool has permanently ceased trading on December 20, 2001, and will be liquidated prior to April 15, 2002, relief was granted to provide a certified Annual Report, covering the period of January 1, 2001, to March 31, 2002, to all participants and filed with the Commission and National Futures Association.
04/10/2002
02-41 PDF Image; Rule 4.22(f)(1); Exemption
A pool comprised of one (1) participant, whose investors included the general partner and relatives and close friends of the general partner; in liquidation and not currently trading or planning to do any trading in futures or options on futures; operating pursuant to a Rule 4.7 exemption; and, submitted statements in support of an exemption from filing a financial statement from each of the participants is granted relief from filing a financial report of 2001.
04/10/2002
02-42 PDF Image; Rule 4.22(f)(1); Exemption
After discovering its error, in interpretation, a pool which had interpreted the "Dear CPO Letter" to provide automatic relief from filing an annual report to pools with only a few months of trading requested a 30 day extension to file their certified annual report for 2002.
04/04/2002
02-43 PDF Image; Rule 3.1(a)(1); Interpretation
The Division of Trading and Markets issued an interpretation that an employee of a Commission registrant who had limited check-signing privileges was not required to be listed as a principal of the registrant where the employee could sign checks drawn only on a holding account, the balance of which was sufficient only to pay the registrant's current bills. Moreover, the employee had no other duties or responsibilities that would require registration with the Commission, and the employee did not supervise any person registered, or required to be registered, with the Commission.
04/09/2002
02-44 PDF Image; Section 4m(1); Interpretation
The Division of Trading and Markets issued an interpretation that the developer of an interactive Internet website would not be required to register as a CTA, where the interactive website would be open exclusively to eligible contract participants (ECPs) and would generate suggestions regarding appropriate OTC energy-related financial instrument transactions based on variables submitted by such ECP bulk users of gas and electricity. ECP customers would not trade such instruments on the website, but could separately negotiate transactions with the website developer or with other ECPs. The Division noted that energy-related financial products are generally "exempt commodities" under the Commodity Futures Modernization Act of 2000, and that transactions in such instruments by ECPs not entered into on a trading facility are generally exempt from the provisions of the Commodity Exchange Act (except for anti-fraud and anti-manipulation provisions). The Division further cautioned the requester that visitors to a non-interactive version of the website should be informed that the OTC instruments discussed on the website are available only to ECPs.
04/15/2002
02-45 PDF Image; Rule 4.22(f)(1); Exemption
A Commodity Pool Operator that operates several 4.7 "fund-of-fund" pools requested an extension of time to file the annual report until August 31, 2002. The request was denied as the Division staff noted that the benefits of providing an audited financial report were outweighed by the need for pool participants to obtain financial information in a timely manner so that they may make informed investment decisions. Thus, delaying delivery of an annual report until August 31 - five months after the normal deadline - outweighs the advantage of having the annual report certified, in light of the CPO qualifying to file unaudited annual reports due to the 4.7 status of the pools.
04/15/2002
02-46 PDF Image; Rule 4.22(f)(2); Exemption
A Commodity Pool Operator which does not intend to have its 2001 annual report certified does not qualify for the extension under Rule 4.22(f)(2). Thus, the requested relief was denied.
04/15/2002
02-47 PDF Image; Rule 4.22(f)(1); Exemption
After discovering its error in interpretation, a CPO which had interpreted the "Dear CPO Letter" to provide automatic relief from filing an annual report for pools with only a few months of trading requested a 30 day extension to file its certified annual reports for 2002.
04/16/2002
02-48 PDF Image; Rule 4.22(c) and (d); Exemption
The operators of two Funds which ceased trading in 1995 and have liquidated substantially all of their assets, but continue to maintain a small portion of original assets in a custodial account in order to meet certain contingent liabilities, requested relief from the certification requirement of Rule 4.22 (d). The CPOs also represented that no transactions in commodity futures have been entered into since the 1995 liquidation and that no such transactions will be entered into in the future. Based upon these representations, the Division has granted the relief from the certification requirement of Rule 4.22(d) for the Funds' fiscal year ending December 31, 2001, on the condition that the 2001 annual reports must prominently state that the Funds are no longer being operated as commodity pools subject to the Commission's rules. Further, the Division acknowledges that these will be the last annual reports filed with the Commission for the Funds because the Funds have ceased operating as commodity pools within the meaning of Rule 4.10(d).
04/15/2002
02-49 PDF Image; Rule 4.22(f)(1); Exemption
A Commodity Pool Operator whose Pools were organized and capitalized in December 2001 and had as few as one and no more than four investors in any one pool, with a small amount of capitalization and which had done no commodity futures trading in 2001, requested an exemption from filing audited financial reports for 2001. Instead it will issue to all participants and file with the CFTC and NFA certified annual reports covering the 13-month period ending December 31, 2002. The CPO will also distribute and submit unaudited financial statements for December 31, 2001, the entire operating history of the Pools.
04/15/2002
02-50 PDF Image; Rule 4.22(f)(2); Exemption
A Commodity Pool Operator which does not intend to have its 2001 annual report certified does not qualify for the extension under Rule 4.22(f)(2). Thus, the requested relief was denied.
04/15/2002
02-51 PDF Image; Rule 4.22(f)(2); Exemption
A Commodity Pool Operator which does not intend to have its 2001 annual report certified does not qualify for the extension under Rule 4.22(f)(2). Thus, the requested relief was denied.
04/15/2002
02-52 PDF Image; Rule 4.22(f)(2); Exemption
A Commodity Pool Operator which does not intend to have its 2001 annual report certified does not qualify for the extension under Rule 4.22(f)(2). Thus, the requested relief was denied.
04/15/2002
02-53 PDF Image; Rule 4.22(f)(1); Exemption
A Commodity Pool Operator that operates several 4.7 "fund-to-fund" pools requested an extension of time to file the annual report until September 15, 2002. The request was denied as the Division staff noted that the benefits of providing an audited financial report were outweighed by the need for pool participants to obtain financial information in a timely manner so that they may make informed investment decisions. Thus, delaying delivery of an annual report until September 15 - five and one half months after the normal deadline - outweighs the advantage of having the annual report certified, in light of the CPO qualifying to file unaudited annual report due to the 4.7 status of the 4.7 pools.
04/24/2002
02-54 PDF Image; Rule 4.22(f)(1); Exemption
A CPO has requested an extension until May 30, 2002, to file the annual reports for Funds that it operates that have offshore administrators. The independent accountant for the Funds has informed the CPO that the audited financial statements will be delayed due to the accountant's inability to obtain from the offshore administrators information needed to complete the audits in a timely manner.
04/25/2002
02-55 PDF Image; Rule 4.22(f)(1); Exemption
A CPO requested an extension of time until October 31, 2002, to file the December 31, 2001, Annual Report for a pool invested in a fund that has filed for bankruptcy. The Division determined that the bankruptcy of an entity in which a pool is invested does not necessarily preclude the preparation of an annual report for the pool in accordance with General Accepted Accounting Principles (GAAP). Thus, a certified public accountant can issue an opinion on that annual report which will be subject to a scope limitation for the affected investment. Under these circumstances, such a scope limitation would not render the accountant's opinion inconsistent with Rule 4.22(d). In light of the substantial delay in distributing an annual report to the participants that would be necessary to ascertain the final effect of the investee fund's pending bankruptcy on the Pool's financial condition, the request for relief was denied.
05/07/2002
02-56 PDF Image; Section 17(j); Regulation 3.12(d); No-Action
As part of the change from a paper-based registration system to an online registration system, NFA, a registered futures association, will not be able to process any registration filings for a two week "quiet period" as of the end of business on May 17, 2002. As a result of this "quiet period," persons could be disadvantaged because they could incur a late filing fee if the 20-day period during which they must file a Form 8-T expires during the "quiet period." Also, individuals who would be eligible for a special temporary license would lose that eligibility if the 60-day period within which they must file a new application after leaving their prior sponsor expiries during the "quiet period." NFA asked that it be permitted to waive the late filing fee for any late Form 8-T filed within the first 20 days that the online registration system is available. Additionally, NFA asked that it be permitted to issue a special temporary license to eligible individuals during the "quiet period." To obtain the temporary license, the sponsor must notify NFA that the individual has been employed as an AP and must file an electronic application for the individual within 20 days after the online registration system is available. The Division of Trading and Markets indicated that permitting NFA to waive the late fee and to grant a special temporary license in the manner described, would not be contrary to the public interest and the purposes of the Act and the Commission's rules thereunder.
05/06/2002
02-57 PDF Image; Rule 4.22; Exemption; Other Written Communication
The Division of Trading and Markets further extended an existing exemption from the reporting requirements of Rule 4.22 with respect to the operation by two affiliated registered CPOs of certain investee pools operated solely for the purpose of facilitating the trading of investor pools operated by the same CPOs to cover the operation of two additional investee pools made part of the structure that was the subject of the original exemption, The extension was based on the following conditions: (1) that the affiliated CPOs remain the CPOs of the new investee pools; (2) that participation in the new investee pools remain restricted to feeder funds operated by the same CPOs; and (3) that the feeder fund annual reports include information about the nature and amount of fees associated with the operation of the new investee pools and a detailed schedule of investments made by the new investee pools.
05/16/2002
02-58 PDF Image; Rule 4.22(f)(1); Exemption
A Commodity Pool Operator requests an extension of time to file two Pools' financial statements, where the Pools' auditors are delayed due to implementing a new AICPA guideline pertaining to the amortization of premiums and discounts on preferred securities. An extension until May 31, 2002, was granted.
05/17/2002
02-59 PDF Image; Section 4m(1) of the Act; CFTC Rule 4.14(a)(1); No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit a power marketer to provide commodity trading advice to electric cooperatives and other participants in the wholesale energy market, without registering as a commodity trading advisor. This relief was based upon, among other reasons, the representation that the commodity trading advice would be limited to hedging transactions and would be offered only in conjunction with the provision of cash market services to entities that qualify as "eligible contract participants" under the Commodity Exchange Act.
05/31/2002
02-60 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested an exemption to provide quarterly reports to participants 45 calendar days after the end of the reporting period, rather than 30 calendar days after quarter-end, as required by Rule 4.7(b)(2). The exemption was granted based on the fact that, after substantial efforts were made and due to reasons beyond the control of the CPO, the financial information from the sub-funds could not be received earlier.
05/31/2002
02-61 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/04/2002
02-62 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/04/2002
02-63 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/04/2002
02-64 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/04/2002
02-65 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/04/2002
02-66 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual reports under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/04/2002
02-67 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual reports under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/05/2002
02-68 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
06/06/2002
02-69 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) has requested an additional extension. The additional time is required because the CPO has not yet received information from certain investee funds.
05/06/2002
02-70 PDF Image; Regulation 4.23; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO from the books and records location requirements of Rule 4.23 such that the CPO may maintain its books and records at the main business office of an affiliated company that provides operational support to the CPO. The relief is subject to the conditions that: (1) the CPO notify the Division if the location of any of the books and records required by Rule 4.23 changes from that as represented to the Division; (2) the CPO remains responsible for ensuring that all books and records required by Rule 4.23 are maintained in accordance with Rule 1.31 and for assuring the availability of such records to the Commission, NFA, or any other agency authorized to review such books and records in accordance with the Act and Commission regulations; (3) within forty-eight hours after a request by a representative of the foregoing, the CPO will obtain the original books and records and provide them for inspection at its main business office; and (4) the CPO discloses in its Disclosure Documents the location of all books and records required under Commission regulation 4.23. The exemption is further subject to the condition that the CPO/CTA remains fully responsible for compliance with Rule 4.23.
05/24/2002
02-71 PDF Image; Regulation 4.22; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO from the periodic and annual reporting requirements of Rule 4.22 in connection with its operation of a master fund that has as its sole participants two feeder funds that are also operated by the CPO. The relief is subject to the conditions that: (i) the CPO remain the CPO of the Master Fund and the Feeder Funds; (ii) participation in the Master Fund is limited to the Feeder Funds, and any fund for which the CPO is the sole CPO; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master fund.
05/24/2002
02-72 PDF Image; Regulation 4.22; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO from the periodic and annual reporting requirements of Rule 4.22 in connection with its operation of master funds that have as their sole participants feeder funds that are also operated by the CPO. The relief is subject to the conditions that: (i) the CPO remains the CPO of the Master Funds and the Feeder Funds; (ii) the CPO limits participation in the Master Funds to the Feeder Funds, and any fund for which the CPO is the sole CPO; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Funds expressed in dollars and a detailed schedule of investments made by the Master Funds.
06/11/2002
02-73 PDF Image; Regulations 4.21 and 4.22; Exemption
The Division of Trading and Markets provided exemptive relief to registered CPOs from the Document Disclosure delivery requirement and periodic and annual reporting requirements of Rules 4.21 and 4.22 in connection with their joint operation of a master fund that has as its sole participants two feeder funds that are also jointly operated by the CPOs. The relief is subject to the conditions that: (i) the CPOs remain the CPOs of the Master Fund and the Feeder Funds; (ii) participation in the Master Fund is limited to the Feeder Funds; and (iii) the annual reports of the Feeder Funds contain financial statement that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Funds.
06/07/2002
02-74 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) requested an additional extension. The additional time is required because the CPO had not yet received information from certain investee funds.
06/13/2002
02-75 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(2) requested an additional extension. The additional time is required because the CPO had not yet received information from certain investee funds.
06/14/2002
02-76 PDF Image; Rule 4.22(c) and (d); Exemption
The CPO of a small fund that began trading late in the year requested exemption from filing an Annual Report for the year ending December 2001. The participants submitted statements in support of the exemption. The exemption was based on the fact that the 2002 Annual Report will cover the entire operating history of the fund.
06/14/2002
02-77 PDF Image; Rule 4.22(f)(2); Exemption
A CPO seeking relief under Rule 4.22(f)(2) which does not intend to have its 2001 annual report certified does not qualify for the relief. As a consequence of the Pool's annual report not being certified, the CPO does not qualify for the extension under Rule 4.22(f)(2). Thus, the requested relief was denied.
06/17/2002
02-78 PDF Image; Rule 4.22 (f)(1); Exemption
A Commodity Pool Operator of a 4.7 "fund of fund" pool requested relief to file the annual report until July 31, 2002. The request was denied as the Division staff noted that the benefits of providing an audited financial report were outweighed by the need for pool participants to obtain financial information in a timely manner so that they may make informed investment decisions. Thus, delaying delivery of an annual report until July 31 outweighs the advantage of having the annual report certified, in light of their qualifying to file unaudited annual reports due to their status as 4.7 pools.
06/28/2002
02-79 PDF Image; Rule 4.22(f); Exemption
A CPO which had claimed an extension of time to file its annual report under Rule 4.22(f)(1) requested an additional extension. The additional time is required because the CPO had not yet received information from certain investee funds.
06/28/2002
02-80 PDF Image; Section 2(a); No-Action
JSE Securities Exchange South Africa requested no-action relief in connection with the offer and sale in the United States of its futures contract based on the FTSE/JSE 40 Top Companies Index.
06/28/2002
02-81 PDF Image; Section 2(a); No-Action
Eurex Deutschland requested no-action relief in connection with the offer and sale in the United Stated of its futures contract on the Dow Jones Global Titans 50 Index.
07/10/2002
02-82 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a small fund that began trading late in the year requested exemption from filing an Annual Report for year ending December 2001. The participants submitted statements in support of the exemption. The exemption was based on the fact that the 2002 Annual Report will cover the entire operating history of the fund.
07/02/2002
02-83 PDF Image; Section 4m(1); Other Written Communication
The Division of Clearing and Intermediary Oversight denied the request of the general partner of a limited partnership that traded commodity interests for relief from the CPO and CTA registration requirement of Section 4m(1) of the Act. Among other things, the general partner had sought relief based upon representations that the limited partnership commits approximately ten percent of its assets to commodity interest trading. The Division stated that there currently is no exception to the obligation to register as a CPO based solely on the amount of its assets a pool commits to commodity interest trading. With regard to the request for relief from CTA registration, the Division noted that, since the general partner must register as a CPO in connection with the limited partnership, upon registering as a CPO the general partner would be exempt from having to register as a CTA, pursuant to Commission Rule 4.14(a)(4).
07/10/2002
02-84 PDF Image; Regulations 4.23 and 4.33; Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to two registered CPOs and CTAs from the books and records location requirements of Rules 4.23 and 4.33 such that the CPOs/CTAs may maintain their books and records at the main business office of an affiliated company that provides operational support to the CPOs/CTAs. The relief is subject to the conditions that: (1) the CPOs/CTAs notify the Division if the location of any of the books and records required by Rules 4.23 and 4.33 changes from that as represented to the Division; (2) the CPOs/CTAs remain responsible for ensuring that all books and records required by Rules 4.23 and 4.33 are maintained in accordance with Rule 1.31 and for assuring the availability of such records to the Commission, NFA, or any other agency authorized to review such books and records in accordance with the Act and Commission regulations; (3) within forty-eight hours after a request by a representative of the foregoing, the CPOs/CTAs will obtain their respective original books and records and provide them for inspection at their main business office; and (4) the CPOs/CTAs disclose in their respective Disclosure Documents the location of all books and records required under Commission regulations 4.23 and 4.33. The exemption is further subject to the condition that the CPOs/CTAs remain fully responsible for compliance with Rules 4.23 and 4.33.
07/11/2002
02-85 PDF Image; Regulations 4.22, 4.7(b)(2), and 4.7(b)(3); Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to registered CPOs from the periodic and annual reporting requirements of Rule 4.22, as modified by Rules 4.7(b)(2) and 4.7(b)(3), in connection with their joint operation of a master fund that has as its sole participant a feeder fund that is also jointly operated by the CPOs. The relief is subject to the conditions that: (i) the CPOs remain the CPOs of the Master Fund and the Feeder Fund; (ii) participation in the Master Fund is limited to the Feeder Fund; and (iii) the annual reports of the Feeder Fund contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
07/24/2002
02-86 PDF Image; Section 2(a); No-Action
ASX Futures Exchange Pty Limited's request for no-action relief in connection with the offer and sale of its futures contracts based on the Standard & Poors/Australian Stock Exchange 200 Index and the Standard & Poors/Australian Stock Exchange 50 Index in the United States.
07/01/2002
02-87 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to the general partner of an offshore pool such that the investment manager of the pool could serve as the registered CPO of the pool instead of the pool's general partner. This position was based upon representations that: (1) the investment manager was in the process of registering as a CPO; (2) the general partner and the investment manger were affiliated entities; (3) the general partner was formed as a separate entity from the investment manager solely to comply with legal requirements of the pool's home country; and (4) the general partner and the investment manager executed cross acknowledgements of joint and several liability for any violations by the other of the CEA and Commission rules. The no-action position was expressly conditioned upon successful and continued registration as a CPO of the investment manager.
07/23/2002
02-88 PDF Image; Regulations 4.21 and 4.22; Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to a registered CPO from the Disclosure Document delivery and the periodic and annual reporting requirements of Rules 4.21 and 4.22, respectively, in connection with its operation of a master fund that has as its sole participants two feeder funds that are also operated by the CPO. The relief is subject to the conditions that: (i) the CPO remain the CPO of the Master Fund and the Feeder Funds; (ii) participation in the Master Fund is limited to the Feeder Funds, and any fund for which the CPO is the sole CPO; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
05/16/2002
02-89 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets took a CPO and CTA registration "no-action" position with respect to a state-regulated insurance company's operation of one or more insurance company separate accounts. The premiums paid by purchasers of a life insurance product would be invested in, inter alia, pools operated by registered CPOs. Factors supporting granting the request included: (1) the investment manager allocating separate account assets would be registered CTA (and investee pools would all be operated by registered CPOs); (2) the requester was a state-regulated insurance company and the insurance product would be sold by SEC-registered broker-dealers; (3) the requester would design the insurance features of the proposed program and would not participate in the management of commodities-related investments (which will be the responsibility of a registered CTA); (4) separate account assets would be exposed to the commodity interest markets only indirectly through limited liability vehicles; and (5) only QEPs would be allowed to purchase the products.
07/22/2002
02-90 PDF Image; Section 4f(a)(2); No-Action
The Division of Clearing and Intermediary Oversight took a no-action position with respect to certain securities broker-dealers and registered representatives who register with the Commission as limited-purpose FCMs and APs for the sole purpose of trading certain proprietary electronically-traded broad-based-index futures contract (the Contracts) on a specified contract market pursuant to Staff Letter 02-22. Under the no-action position, such limited-purpose FCMs and APs would be permitted to notice-register under Rule 3.10(a)(3) for the purpose of offering and selling security futures products without violating the commodity interest trading activity restrictions of Rule 3.10(a)(3)(A), provided that such limited purpose FCMs and APs otherwise comply fully with the terms and conditions of Staff Letter 02-22 with respect to the offer and sale of the Contracts, and the requirements of Rule 3.10(a)(3) with respect to the offer and sale of security futures products.
07/30/2002
02-91 PDF Image; Section 1a(23) and Regulation 1.3(mm); Interpretation
The Division of Clearing and Intermediary Oversight provided an interpretation that a data service provider that makes available to its customers an integration tool to permit the customers to access the order-entry system of the FCM of their choice is not an IB and, therefore, not required to register as such. The Division noted, in particular, that the data service provider does not solicit customers or orders for an FCM or the trading of futures contracts (customers indicate to the data service provider the FCM with which they have an existing relationship), does not recommend, propose, or encourage that customers use any particular FCM, or place any orders for futures contracts, and is not accepting customer orders, but simply providing technology that connects the customer to its FCM's order entry system. The customer is submitting its order to the FCM and not the data service provider. The Division further noted that the fees paid to the data service provider by the FCM are a reflection of the costs of the development and ongoing support of the required technology and are intended to cover these costs and are not associated with the placement of customer orders (the fee is paid by the FCM whether the trade is executed or not).
08/02/2002
02-92 PDF Image; Rule 30.4(b); No-Action
The Division of Clearing and Intermediary Oversight issued a letter granting no-action relief to permit an entity to execute on behalf of customers located in the U.S. the futures portion of basis transactions cleared on Eurex Deutschland and the London International Financial Futures and Options Exchange without having to register as an introducing broker pursuant to Rule 30.4(b). The Division's no-action position is limited to the contracts specifically delineated in the letter and is subject to compliance with the terms and conditions set forth therein.
08/08/2002
02-93 PDF Image; Rule 4.22(c) & (d); Exemption
The CPO of a small fund that began trading late in the year requested exemption from filing an Annual Report for year ending December 2001. The participants submitted statements in support of the exemption. The exemption was based on the fact that the 2002 Annual Report will cover the entire operating history of the funds.
08/08/2002
02-94 PDF Image; Rule 1.17, 1.25; No-Action
The Division of Clearing and Intermediary Oversight issued a no-action position with regard to FCM's that include the value of their clearing organization stock as an asset subject to certain conditions.
08/13/2002
02-95 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested an exemption to provide quarterly reports to participants 45 calendar days after the end of the reporting period, rather than 30 calendar days after quarter-end, as required by Rule 4.7(b)(2). The exemption was granted based on the fact that, after substantial efforts were made and due to reasons beyond the control of the CPO, the financial information from the underlying funds could not be received earlier. Further, it was conditioned upon the regular distribution of monthly valuations.
07/26/2002
02-96 PDF Image; Sections 5 and 5a of the Act; No-Action
The Division of Market Oversight issued a letter amending the no-action relief granted November 12, 1999, permitting the International Petroleum Exchange of London Limited (IPE) to make its electronic trading and order matching system, known as Energy Trading System II, available to its members in the U.S. without obtaining contract market designation pursuant to Sections 5 and 5a of the CEA. Subject to two conditions, the amendment permits IPE to make its UK Natural Gas (NBP) futures contract available in the U.S. on an electronic trading system operated by Intercontinental Exchange, Inc., without obtaining contract market designation or registration as a derivatives transaction execution facility pursuant to Sections 5 and 5a of the CEA.
08/23/2002
02-97 PDF Image; Rule 4.7; Exemption
The CPO of a 4.7 fund of funds pool requested permission to provide quarterly reports to participants, as required by Rule 4.7 (b)(2), 45 calendar days after the end of the reporting period, rather than 30 calendar days after quarter-end. The exemption was granted based on the fact that after substantial efforts were made, and due to reasons beyond the control of the CPO, the financial information could not be received earlier from the offshore sub-funds.
08/23/2002
02-98 PDF Image; Regulations 4.7(b)(2), and 4.7(b)(3); Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to a registered CPO (CPO T) from the periodic and annual reporting requirements of Rules 4.7(b)(2) and 4.7(b)(3) in connection with its operation of a master fund that has as its sole participants three feeder funds. CPO T serves as the CPO of two of the feeder funds and CPO U serves as the CPO of the remaining feeder fund. Both CPOs share the same owners. Relief is subject to the conditions that: (i) CPO T and CPO U remain the CPOs of the respective funds, and the owner of CPO T and CPO U remain the same; (ii) participation in the Master Fund is limited to the feeder funds; and (iii) the annual reports of the feeder funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
08/23/2002
02-99 PDF Image; Regulations 4.7(b)(1), 4.7(b)(2), and 4.7(b)(3); Exemption
The Division of Clearing and Intermediary Oversight provided exemption relief to a registered CPO from the disclosure and periodic and annual reporting requirements of Rules 4.7(b)(1), 4.7(b)(2) and 4.7(b)(3) in connection with its operation of a master fund that has as its sole participants two feeder funds that are also operated by the CPO. The relief is subject to the conditions that: (i) the CPO remain the CPO of the Master Fund and the Feed Funds; (ii) participation in the Master Fund is limited to the Feeder Funds, and any fund for which the CPO is the sole CPO; and (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the fees associated with the operation of the Master Fund expressed in dollars and a detailed schedule of investments made by the Master Fund.
12/23/2002
03-01 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight confirmed that an insurance company could engage an unregistered CTA (the Advisor) to advise certain of the insurance company's separate accounts pursuant to relief previously-granted to the insurance company, notwithstanding that the previously-granted relief specified that only registered CTAs would advise the separate accounts. The Division based its action on the following: (1) the Advisor is a Commission registrant (albeit as an IB and not as a CTA); (2) ach of the Advisor's principals is listed and its APs are registered; and (3) because the insurance company, the separate accounts and all separate account participants are QEPs, even if the Advisor were required to register as a CTA, it could claim relief under Rule 4.7 from otherwise applicable disclosure and recordkeeping requirements.
12/23/2002
03-02 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight affirmed previously-taken CPO registration no-action positions (the Prior Relief) with respect to a co-general partner of a commodity pool (Pool 1) and directors of a second pool (Pool 2) that was the sole limited partner of Pool 1, notwithstanding that participation in Pool 2 would now be open to any QEP. Among the representations made in requesting the Prior Relief had been a representation that only non-U.S. persons and tax-exempt U.S. persons could participate in Pool 2. In affirming the Prior Relief, the Division noted that it had taken similar positions (subsequent to the Prior Relief) that were based on factors that did not include participant restrictions (i.e., co-general partners were affiliated and the co-general partner that solicited participants or invested pool assets was a registered CPO; the co-general partner seeking registration relief performed only administrative functions; and the co-general partners acknowledged joint and several liability for Commodity Exchange Act or Commission rule violations).
12/24/2002
03-03 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight took CPO and CTA registration no-action positions with respect to the manager of a limited liability company that sought to trade commodity interests, where both members of the LLC were commonly owned and controlled, and the LLC's manager was a registered investment adviser and a wholly-owned subsidiary of one of the LLC's members.

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