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All Letters

Date
All Letters
01/14/2003
03-04 PDF Image; Section 4m(1) and Rule 4.4(a)(8); No-Action
The Division of Clearing and Intermediary Oversight took: (1) a CTA registration no-action position regarding an SEC-registered investment adviser providing commodity interest trading advice to Japanese investment trusts in which only Japanese nationals may participate; and (2) a CPO registration no-action position regarding a Japanese sponsor and organizer operating the Japanese investment trusts. The Division also advised that neither the CTA no-action position taken in this letter nor a similar position taken in a prior letter would bar the SEC-registered adviser from subsequently claiming relief under Rule 4.14(a)(8), should it decide to provide commodity interest trading advice to Rule 4.5 entities in a manner consistent with Rule 4.14(a)(8).
01/23/2003
03-05 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight 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 fund the separate accounts, the assets of which would be invested in commodity pools operated by registered CPOs. Factors supporting granting the request included: (1) the investee pools would all be operated by registered CPOs and advised by registered CTAs; (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 commodity interest-related activities; (4) separate account assets would not invest directly in commodity interests but would only invest through limited liability trading vehicles; and (5) purchasers of the product would be limited to QEPs.
02/13/2003
03-06 PDF Image; Section 2(a); No-Action
Osaka Securities Exchange's request for no-action relief in connection with the offer and sale of its futures contracts based on the FTSE Japan Index and the MSCI Japan Index in the United State.
02/13/2003
03-07 PDF Image; Section 2(a); No-Action
Singapore Exchange Derivatives Trading Limited's request for no-action relief to offer and sell its futures contracts on the MSCI Japan Index in the United States.
02/24/2003
03-08 PDF Image; Section 5 and 5a of the CEA; 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 early morning (U.K. time) trading session in the Brent futures and Gas Oil futures contracts available in the U.S. on the ICE Platform, 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.
01/14/2003
03-09 PDF Image; Regulation 4.7(b)(4); Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to CPOs X and Y, located in state A, from requirements of Rule 4.7(b)(4) that they maintain certain books and records at their main business office and in accordance with Rule. 1.31. An affiliate of X and Y, Z, will maintain the books and records at Z's main office in State B. Relief is subject to the conditions that: (1) X and Y notify the Division if the location of any of the required books and records changes from that as represented to the Division; (2) X and Y remain responsible for ensuring, among other things, that all of their required books and records are maintained in accordance with Rule 1.31 and for assuring the availability of the records to the Commission, NFA, or any other agency authorized to review such books and records. This exemption is further subject to the condition that X and Y remain responsible for compliance with Rule. 4.7(b)(4).
02/07/2003
03-10 PDF Image; Regulation 4.22; 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 in connection with their joint operation of master funds that have as their sole participants feeder funds or other master funds that are jointly operated by the CPOs or other CPOs with the same ownership and management. This relief is subject to, among other things: (1) the CPOs retaining identical ultimate ownership, officers and directors; (2) participation in the Master Funds being limited to the Feeder Funds, and any fund for which the CPOs are the sole CPOs; and (3) the annual reports of the Feeder Funds containing financial statements that include, among other information, the fees associated with the operation of the applicable Master Funds.
01/22/2003
03-11 PDF Image; Regulation 4.22; 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 in connection with their joint operation of a sub fund, that has as its sole participants two feeder funds that are jointly operated by the CPOs. The Division also confirmed that the exemption granted to the CPOs by prior no-action letters continues to apply with respect to the operation of the sub funds and feeder funds identified in the prior no-action letters. This relief is subject to the conditions that: (1) the CPOs remain the CPOs of the sub funds; (2) participation in the sub fund is limited to any fund for which the CPOs are the sole CPOs; and (3) the annual reports of the feeder funds contain financial statements that include, among other information, the fees associated with the operation of the sub funds in which they invest.
03/10/2003
03-12 PDF Image; Section 5 and 5a; No-Action
The Division of Market Oversight issued a letter further amending the no-action relief granted November12, 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 extend its early morning (U.K. time) trading sessions in the Brent futures and Gas Oil futures contracts available in the U.S. on the ICE Platform, 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.
03/17/2003
03-13 PDF Image; Section 4d(1); No-Action
The Division of Clearing and Intermediary Oversight recommended that the Commission not take any enforcement action against an FCM or a bank affiliate of the FCM if the bank affiliate introduced commodity customers to the FCM without being registered with the Commission as an IB. This position was based upon: (1) the bank affiliate being subject to Federal and State banking regulations; (2) all employees of the bank affiliate that introduce customers to the FCM being registered as APs of the FCM; (3) each office where the futures-related activities will take place being identified as a branch office of the FCM and listed as such in the appropriate forms filed with the National Futures Association; (4) a registered AP of the FCM, appropriately designated as a branch office manager, supervising the futures-related activities of the bank affiliate employees registered as APs of the FCM; and (5) the FCM being liable for the activities of such APs as provided for under the Act and Commission rules.
03/25/2003
03-14 PDF Image; Regulation 4.22; Exemption
The Division of Clearing and Intermediary Oversight 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 four 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 (iii) the annual reports of the Feeder Funds contain financial statements that include, among other information, the detailed income and fees associated with the operation of the Master Fund expressed in dollars.
04/01/2003
03-15 PDF Image; Rule 4.35(b); Exemption
A CTA operating two separate companies, whose trading was controlled by the same trading principal, requested an exemption from disclosing the past performance of both companies in each company's Disclosure Document. The exemption was denied based upon Rule 4.35(b)'s requirement that past performance of all accounts traded by a trading principal of the CTA must be disclosed in the Disclosure Document.
04/07/2003
03-16 PDF Image; Section 2(a); No-Action
Euronext Amsterdam N.V.'s requested no-action relief in connection with the offer and sale in the United States of its futures contracts based on the Amsterdam Exchanges Index.
04/14/2003
03-17 PDF Image; Sections 5 and 5a; No-Action
The Division of Market Oversight issued a letter further 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. The amendment permits IPE to make all of its contracts, including Brent Crude futures and option contracts, Gas Oil futures and option contracts, and U.K. Natural Gas futures contracts, available in the U.S. during the course of the entire trading day on the ICE Platform, 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.
04/04/2003
03-18 PDF Image; Section 4m(1) and Rule 4.14(a)(8); No-Action
The Division of Clearing and Intermediary Oversight took: (1) a CPO registration no-action position regarding a U.K. investment adviser and its U.S. person directors in connection with operating certain non-U.S. commodity pools in which only non-U.S. persons may participate; and (2) a CTA registration no-action position regarding the same U.K. investment adviser and two affiliated SEC-registered investment advisors providing commodity interest trading advice to the same non-U.S. commodity pools. The Division also advised that the CTA no-action position taken in this letter would not bar the SEC-registered advisers from continuing to claim relief under Rule 4.14(a)(8), or bar the U.K. investment adviser from claiming Rule 4.14(a)(8) relief in the first instance, provided U.K. investment adviser's application for registration with the SEC as an investment adviser becomes effective.
04/28/2003
03-19 PDF Image; Section 4d, Rule 1.3(mm); No-Action
The Division of Clearing and Intermediary Oversight denied relief from registration as an introducing broker as the requestor would be directing potential customers to Commission registrants for a fee.
04/17/2003
03-20 PDF Image; Section 4m(1); No-Action
The Division of Clearing and Intermediary Oversight provided temporary no-action relief to allow a registered CPO that operates certain funds, for which it is required to register as a CPO, to operate certain other funds as if it were an unregistered CPO. This relief is subject to, among other things: (1) the requirement that the CPO operate the funds for which it is seeking relief pursuant to the requirements of a temporary no-action position announced by the Commission and published in the Federal Register pending final action on certain proposed rules; and (2) the expiration of the no-action relief when final action is taken on the proposed rules.
04/17/2003
03-21 PDF Image; Regulation 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 CPO from the 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 feeder funds that are operated by the CPO. This relief is subject to, among other things: (1) participation in the master fund being limited to the feeder funds, and any fund for which the CPO is the sole CPO; and (2) the annual reports of the feeder funds containing financial statements that include, among other information, the fees associated with the operation of the master fund.
04/17/2003
03-22 PDF Image; Regulation 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 CPO from the 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 feeder funds that are operated by the CPO. This relief is subject to, among other things: (1) participation in the master fund being limited to the feeder funds, and any fund for which the CPO is the sole CPO; and (2) the annual reports of the feeder fund containing financial statement that include, among other information, the fees associated with the operation of the master fund.
05/05/2003
03-23 PDF Image; Regulation 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 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 feeder funds that are operated by the CPO or another CPO with the same ownership and management. This relief is subject to, among other things: (1) the CPOs retaining identical management and ownership; (2) participation in the Master Fund being limited to the Feeder Funds, and any fund for which the CPOs are the sole CPOs; and (3) the annual reports of the Feeder Funds containing financial statements that include, among other information, the fees associated with the operation of the applicable Master Fund.
05/05/2003
03-24 PDF Image; Regulation 4.7(b)(2) and 4.7(b)(3); Exemption
The Division of Clearing and Intermediary Oversight provided exemptive relief to a registered CPO 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 a feeder fund that is operated by the CPO and a feeder fund that is operated by CPOs with the same ownership and management. This relief is subject to, among other things: (1) the CPOs retaining identical management and ownership; (2) participation in the Master Fund being limited to the Feeder Funds, and any fund for which the CPOs are the sole CPOs, and (3) the annual reports of the Feeder Funds containing financial statements that include, among other information, the fees associated with the operation of the applicable Master Fund.
06/03/2003
03-25 PDF Image; Rule 4.35; No-Action
A Commodity Trading Advisor, which is also registered as an Investment Advisor, requested relief concerning its presentation of past performance in accordance with Rule 4.35. The Division of Clearing and Intermediary Oversight determined not to recommend that the Commission commence any enforcement action against the CTA based solely upon its failure to present its past performance information pursuant to the specific requirements of Rule 4.35, provided that it remains in compliance with applicable requirements under securities laws and its commodity interest trading continues to represent less than 1% of its assets under management.
05/30/2003
03-26 PDF Image; 1a(6) of the CEAct; Commission rules 1.33(bb), 4.14(a)(9) and 166.3; Interpretation
The Division of Clearing and Intermediary Oversight has determined that, where an associated person (AP) of an introducing broker (IB) creates a trading program that generates trading signals, and solicits clients solely to execute a "letter of direction" that provides that the IB should execute trades by following the program's signals "as close as reasonably possible," registration as a commodity trading advisor (CTA) is required of either the IB or the AP. DCIO stated that this scenario constituted managing a client's trading under an informal arrangement and, therefore, exemption from CTA registration under rule 4.14(a)(9) was not applicable. DCIO further stated that, if the IB registered as a CT, the AP would not also be required to register as a CTA in his individual capacity.
06/18/2003
03-27 PDF Image; Section 2(a); No-Action
EDX London Exchange's request for recognition as Successor-in-Interest to OM London Exchange Limited under the 1996 No-Action Letter regarding the offer and sale of futures contracts on the OMX index in the United States.
07/17/2003
03-28 PDF Image; Section 1a(12) and (23) of the CEAct and Commission Rules 1.3(g) and (mm), 1.57 and 30.10; No-Action
The Division of Clearing and Intermediary Oversight issued a no-action letter to permit a foreign entity that has previously been granted exemption from registration by a Commission order issued under Rule 30.10 in connection with foreign futures and options to also act as an IB with respect to trades executed on U.S. markets for U.S. institutional customers without registering as an IB. The foreign entity is an affiliate of a U.S. FCM to which it would introduce business and the relief was conditioned upon the U.S. FCM acknowledging joint and several liability for the foreign entity's handling of orders for U.S. institutional customers for trading on U.S. markets.
07/16/2003
03-29 PDF Image; Rule 155.4(a); Exemption
The Division of Clearing and Intermediary Oversight denied relief to an Introducing Broker who wished to bunch proprietary orders with customer orders. The IB planned to use average pricing to allocate orders after execution. The Division stated that 155.4(a) mandates the Introducing Brokers use a "customer first" principle, therefore the IB's accounts must not be bunched with customer accounts.
07/16/2003
03-30 PDF Image; Rule 155.4(a); Exemption
The Division of Clearing and Intermediary Oversight denied relief to an Introducing Broker who wished to bunch proprietary orders with customer orders. The Division stated that 155.4(a) mandates that IBs use of "customer first" principle, therefore the IB's account must not be bunched with customer accounts.
08/25/2003
03-31 PDF Image; 4d(a)(2) of the CEAct, Regulation 1.20 and Regulation 30.7; Interpretation
A bank requested an interpretation that a deposit account product they developed would be acceptable for the deposit of customer segregated funds in accordance with Commission Regulation 1.20. Based on an analysis of the account, the Division issued an interpretation that the account would be acceptable as a deposit location as the account would be properly titled and covered by appropriate acknowledgements by the bank, and the funds in the account would at all times be immediately available for withdrawal on demand. The Division also confirmed that as the account was acceptable for the deposit of segregated funds, the account also was adequate to fulfill the requirements of Commission Regulation 30.7 with respect to secured amounts.
08/13/2003
03-32 PDF Image; Regulation 4.7; Exemption
The Division of Clearing and Intermediary Oversight confirmed exemptive relief previously granted to a registered CPO from the disclosure document, periodic and annual reporting requirements of Rule 4.7 in connection with the operation of a master fund that previously had as its sole participants two feeder funds that are operated by the CPO and an affiliate of the CPO. The Division confirmed the prior exemption despite the fact that the CPO of the master fund had allowed two investors from the feeder funds to invest directly in the master fund, but provided them with disclosure document and periodic and annual financial reports required by Rule 4.7. This relief is subject to the condition that: (1) the CPO comply with all the conditions set forth in the previous exemptive letters (except that it may continue to allow the two investors to participate in the master fund); and (2) the CPO continue to provide periodic and annual financial reports to the two investors in accordance with the requirements of Rules 4.7(b)(2) and 4.7(b)(3).
10/01/2003
03-33 PDF Image; Section 4m(1) - CPO and CTA registration requirements; No-Action
The Division of Clearing and Intermediary Oversight took: (1) a CPO registration no-action position regarding an SEC-registered investment adviser (the "Adviser") and the directors of a family of Puerto Rico investment companies (the "Funds"); and (2) a CTA registration no-action position regarding the Adviser. Each of the Funds is registered under the Puerto Rico Investment Companies Act, has its principal place of business in Puerto Rico, and may be offered and sold only to persons whose principal place of business or principal residence is in Puerto Rico. At least 75% of each Fund's directors have their principal residence in Puerto Ricco and none of the directors is subject to statutory disqualification under section 8(a)(2) or (a)(3) of the CEAct.
10/09/2003
03-34 PDF Image; Section 4m(1) - CPO registration requirements; No-Action
The Division of Clearing and Intermediary Oversight took a no-action position permitting a CPO to claim exemption under rule 4.13(a)(3) with respect to an existing pool, notwithstanding that one participant was not an accredited investor ("AI"), where the non-AI was a charitable trust formed by family members who were AIs to teach their children about charitable giving, and the family members were also invested in the pool.
10/17/2003
03-35 PDF Image; Section 2(a); No-Action
National Stock Exchange of India Limited's request for no-action relief in connection with the offer and sale of its futures contract based on the Standard & Poors CNCX Nifty Index in the United States.
11/04/2003
03-36 PDF Image; Regulation 32.13 (g); Interpretation
The Australian Wheat Board (AWB) seeks an interpretive letter authorizing its wholly-owned subsidiary, AWB (USA), Inc., to conduct over-the-counter trading, both as an offeror and an offeree of agricultural trade option contracts, in accordance with the exemptive provisions of Regulation 32.13(g). The letter finds that AWB's proposed option dealings, as described in its letter, would fall within the exemption.
11/05/2003
03-37 PDF Image; Rule 1.17; No-Action
No-action position permitting futures commission merchants, subject to certain limitations, to include stock of the Board of Trade Clearing Corporation as a current asset in computing their adjusted net capital under Commission Rule 1.17.
12/29/2003
04-01 PDF Image; Section 4(d)(a)(1); Interpretation
The Division of Clearing and Intermediary Oversight issued an interpretation that an intercompany arrangement between a registered securities broker-dealer (BD) and a registered FCM (each commonly-owned) that included assignment of commission income from the FCM to the BD so that the BD could make a single payment to employees of both firms does not require the BD to register as an FCM. The BD will not solicit or accept customer orders for futures or commodity option contracts, nor will it handle customer funds related thereto. Both companies share senior management, office space and support staff. The registered representatives of the broker-dealer are also APs of the FCM, and the BD will provide all employer-related administrative functions, including human resources functions, and consequently the payment of futures-related commissions to the APs of the FCM.
12/23/2003
04-03 PDF Image; Sections 17(j) and 17 (k) of the CEAct.; Other Written Communication
The Division of Clearing and Intermediary Oversight declined, in response to a written request, to recommend that the Commission withdraw its approval of an NFA rule that provides that futures commission merchants that are forex dealer members impose on customers a security deposit of two percent on retail over-the-counter foreign currency transactions involving "major" currencies.

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