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No-Action Letters

Date
No-Action Letters
01/01/1996
96-01 PDF Image; Rules 4.35 and 4.25(b); No-Action
Where a newly-formed CTA had the same principals as an existing CPO but where the principals perform different functions for the firms, relief from certain provisions of Rule 4.35(b) was issued. Confirmation of the applicability of Rule 4.25(b) also made.
01/18/1996
96-11 PDF Image; Section 4m(1); No-Action
No action relief granted to the operator of a commodity pool for failing to register as a CPO where all members of the pool are either family members, close personal friends, or long-time business associates of the operator and the operator is a successful and experienced commodity trader.
01/24/1996
96-13 PDF Image; Rule 4.7; No-Action
Three individuals with substantial financial sophistication may be treated as qualified eligible participants ("QEPs") under Rule 4.7 in connection with a proposed commodity pool they will manage. In addition to the proposed pool, the three individuals currently manage in excess of 1.25 billion dollars of assets. Further, the individuals will have complete access to all of the records regarding the pool.
01/29/1996
96-14 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets granted a Company relief from registration commodity pool operator ("CPO") registration with respect to a Fund which was 99.8 percent owned by the three principals of the Company and by grantor trusts established by two of the principals for their children. Further, each of the three principals jointly participated in forming the Fund, has been directly involved in managing the Fund, and is a qualified eligible participant ("QEP") as the term is defined in Rule 4.7. The remaining portion of the Fund was owned by two long-standing business associates of the principals and employees of wholly-owned affiliates of the Company.
01/17/1996
96-16 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets took a no-action position that would allow a registered CPO to admit investors in a Pool who were not QEPs and still claim relief pursuant to Rule 4.7(a). The pool was a fund of funds. The non-QEP investors were all accredited investors. Moreover, they were sophisticated investors as a result of the experience gained through their employment or management of their personal fortunes and had business or personal links to the CPO.
02/28/1996
96-18 PDF Image; Rule 1.33(b); No-Action
The Division of Trading and Markets has permitted an FCM to fulfill its obligations under Rule 1.33(b) by sending daily confirmation statements via facsimile to institutional customers who have facsimile machines, without mailing such statement in hard copy form. The no-action relief was conditioned upon several factors: (1) the FCM's current clients receiving daily confirmation statement solely by facsimile transmission must continue to meet the criteria for "institutional customers" established by the Federal Reserve Board; (2) the FCM's current clients and any future clients meeting the criteria in the institutional customer definition and wishing to avail themselves of the relief must provide written revocable consent to the FCM via hard copy agreement, to receive delivery of daily confirmation statements solely by facsimile transmission; (3) the FCM must continue to furnish monthly account statements in hard copy form; and (4) the FCM must maintain the confirmation statements in accordance with the standards set forth in Commission Rule 1.31.
02/22/1996
96-19 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets permitted registered CPOs to claim relief under Rule 4.7(a), notwithstanding the presence of non-QEPs in their pool, where the non-QEPs posses either futures experience and familiarity with the fund's management and operations, or have close family relationships with a person who is the sole proprietor of one of the fund's general partners and a principal of the fund's other general partner.
02/27/1996
96-20 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets provided no-action relief to a CPO of a fund such that it could claim relief under Rule 4.7(a) even though some of the investors in the fund were not qualified eligible participants (QEPs) as defined in the rule. All of the non-QEP investors were professional-level employees or officers of the CPO or certain affiliated companies, and all of them had access to information on the fund and its investments. In addition, the Division granted no-action relief so that the fund could invest more than ten percent of its assets in other Rule 4.7-exempt pools despite the presence of the non-QEP investors.
02/29/1996
96-21 PDF Image; Rule 1.10(d)(4); No-Action
The Division of Trading and Markets has issued a no-action letter to the Chicago Board of Trade concerning the attestation of financial reports where a futures commission merchant (FCM) is organized as a partnership. Commission Rule 1.10(d)(4) provides that if an FCM is organized as a partnership, a general partner must sign the required attestation on Form 1-FR. However, the Division indicated in its letter to CBT that it would not recommend that the Commission take enforcement action under Rule 1.10(d)(4) against an FCM organized as a partnership that has only a corporation or a limited liability company as a general partner based solely upon such FCM's chief financial officer (or the individual who has these responsibilities) signing the attestation on Form 1 -FR. The Division further stated in its letter that in the case of an FCM with another partnership as its general partner, the general partner of such other partnership must sign the attestation required by Rule 1.10(d)(4). The Division also advised CBT that it could interpret its own rule concerning attestation of financial reports in a manner similar to that outlined in the Division's letter.
03/05/1996
96-22 PDF Image; Rule 4.10(c); No-Action
The Division of Trading and markets gave "no-action" relief permitting a registered CPO, on a one-year pilot-program basis and subject to specified accounting and reporting requirements, to form separate general partnerships (Account Partnerships), the partners of which would be members of a specified group of existing United States pools operated by the CPO (and each pool essentially would be fully invested in one or more Account Partnerships). Eligible pools would be limited (with one exception) to $6 million or lower net asset value and five years or more continuous operation at the time an Account Partnership is formed. Each Account partnership would trade through a single CTA trading program and each pool in an Account partnership would share pro rata in profits and losses. The CPO agreed to indemnify each pool fr losses resulting from CPO's failure to operate an Account Partnership as contemplated. All trades would be cleared through CPO-affiliated FCM, and FCM agreed to collect any deficit pro rata and to look to CPO before attempting to collect a greater-than-pro-rata share from any pool. Pool participants would be given prior notice of such pool's participation in an Account Partnership and opportunity to redeem.
02/14/1996
96-26 PDF Image; Section 4m(1); No-Action
The corporate general partner of an investment limited partnership (the "Fund") was not required to register as a commodity pool operator where, among other things: (1) the Fund is an investment vehicle whose primary business is other than the trading of commodity interests; (2) each investor is a QEP and a close personal friend or business associate of the Fund's organizer; and (3) the Fund will trade commodity interests solely for bona fide hedging purposes and will not commit more than five percent of its net assets to establish commodity interest positions. In addition, an affiliate of the general partner which would be providing commodity interest trading advice to the Fund was not required to register as a commodity trading adviser where the affiliate is registered with the SEC as an investment adviser and does not otherwise provide commodity interest trading advice to others or hold itself out to the public as a CTA.
02/20/1996
96-27 PDF Image; Section 4m(1): Request for Relief from CPO Registration Requirements; No-Action
General partners of an investment vehicle (the "Fund") were not required to register as CPOs where, among other facts: (1) the Fund was formed by converting the structure of an existing general partnership into a limited partnership for the purpose of allowing the traders and senior personnel an opportunity to participate in the profits and limit their potential liability; (2) there are only six investors; all of whom are traders or senior personnel of the Fund; and (3) the aggregate initial margin and premiums for regulated futures contracts that will be traded by the Fund will not exceed five percent of the fair market of the Fund's total assets.
02/29/1996
96-28 PDF Image; CEA section 5; No-Action
The Division of Trading and Markets issued a no-action letter authorizing the Deutsche Teminborse (DTB) to install and utilize DTB computer terminals in the United States in connection with the purchase and sale of certain futures and options contracts. The relief is limited to placement of proprietary trades on behalf of DTB members, and, in the case of any DTB member who becomes a registered FCM, on behalf of foreign futures and options customers as well. In granting the relief, the Division took into consideration various factors, including the fact that the DTB is subject to oversight by German regulatory agencies, and the existence of information sharing agreements between the regulatory agencies of Germany and the United States. Moreover, the Division's authorization is subject to numerous conditions, including provisions that permit the CFTC and NFA to obtain prompt access to the books and records of DTB members with terminals in the United States, and a requirement that DTB members taking advantage of the Division's authorization identify themselves to the CFTC and the NFA.
04/12/1996
96-29 PDF Image; Rules 4.21 - 4.26; No-Action
The Division of Trading and Markets gave "no-action" relief permitting a registered commodity pool operator (CPO) to operate a Chicago Board Options Exchange market maker (organized as a limited partnership) without complying with the disclosure, reporting and recordkeeping requirements of Commission Rules 4.21 - 4.26, notwithstanding that the market maker will use Standard & Poor's 500 Stock Index futures on a restricted basis to hedge day-end imbalances in its trading portfolio. The Division also gave "no-action" relief permitting the general partner of a second limited partnership (that is itself a limited partner of the market maker) to avoid registering as a CPO, notwithstanding that the market maker's futures trading will cause the second limited partnership to be a commodity pool.
03/29/1996
96-30 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets permitted a registered CPO to claim relief under Rule 4.7(a), notwithstanding the presence of non-QEPs in its pool, where the non-QEPs all have been established as part of the CPO's financial and estate planning, and the CPO will make all investment decisions for the non-QEPs.
04/22/1996
96-31 PDF Image; Section 4m(1) & Rule 4.31; No-Action
The Division of Trading and Markets provided registration relief to a CPO, which was organized off-shore but wholly owned by United States persons, in connection with its operation of a foreign pool where the three owners of the CPO were already Commission registrants and the CPO represented that it would keep and make available to the Commission records equivalent to those required under Commission rules. The relief was conditioned upon the owners of the CPO remaining registered with the Commission, and the CPO's not undertaking any activity that could reasonably lead to the solicitation of United States persons to invest in the pool. In addition, the Division exempted the CTA of the pool from providing a disclosure document to the CPO based upon the fact that the one of the owners of the CPO was also the sole proprietor of the CTA and another owner of the CPO was a registered AP of the CTA.
04/23/1996
96-32 PDF Image; Section 4m(1) of the Act, Rule 4.22(c); No-Action
The Division of Trading and Markets continued to provide "no-action" relief from registration as a commodity pool operator (CPO) to a company with respect to a fund despite the fact that three additional persons acquired an ownership interest in the fund. These three additional persons have attributes similar to the persons whose ownership interests were disclosed in connection with Interpretative Letter 96-14, in which the Division first granted the company no-action relief. Further, the Division granted the company a no-action position for failure to file and distribute Annual Reports for the years ending 1995 and 1996, as required under Rule 4.22(c). This position was based on the fact that no persons other than those disclosed in connection with the CPO no-action relief letters had any ownership interests in the fund since January 1, 1995, the Annual Reports were highly confidential and prepare annual financial reports for the years ending 1995 and 1996, which would be certified by an independent public accountant and would be available to the Fund's participants and the Commission for a period of five years.
04/11/1996
96-34 PDF Image; Section 4d(2) of the Act, Commission Rule 1.17, 120-1.30, 1.32,1.36 and 30.7; No-Action
A U.S. FCM wishing to operate in Taiwan in accordance with Taiwan's Foreign Futures Trading Law (FFTL) must specifically allocate 200 million new Taiwanese dollars (NT $) as operational capital in Taiwan, of which at least NT $50 million must be deposited as a business guaranty bond in a bank designated by Taiwan's Securities and Exchange Commission. A U.S. FCM operating in Taiwan requested relief such that deposits in Taiwan could be included in current assets for U.S. regulatory capital purposes. No-action relief was provided to the FCM with respect to its failure to take a 100 percent charge against its net capital for deposits made to comply with the requirements of Taiwan's FFTL and rules promulgated thereunder in branches or subsidiary banks located in Taiwan provided that: (1) the subsidiaries or branches in Taiwan are part of an international banking institution which is organized under the law, and whose headquarters is located in and subject to the regulatory authority, of a sovereign national government where a major money market as defined by the SEC is located; (2) the commercial paper or long term debt of the international banking organization referred to above is rated in one of the two highest rating categories by Standard and Poor's Corporation of Moody's Investor Services, Inc.; (3) the FCM takes a 100 percent charge against any deposit in Taiwan to the extent of NT $50 million, or such deposit is segregated or otherwise restricted for the benefit of Taiwanese customers or otherwise, whichever amount is greater; (4) the FCM takes appropriate haircuts under CFTC Rule 1.17 with respect to non-U.S. currency, government bonds or other financial instruments deposited in Taiwan; and (5) the FCM's adjusted net capital would exceed the minimum required under CFTC Rule 1.17 even if the deposits in Taiwan were subject to a 100 percent haircut, i.e., such deposits constitute excess adjusted net capital.
05/02/1996
96-36 PDF Image; Rule 4.7 - Request to treat pool participants as QEPs.; No-Action
The Division of Trading and Markets gave "no-action" relief permitting a registered CPO to treat as QEPs certain individuals employed by the CPO or its affiliates for at least five years in operational or management positions (and the wife of one such employee), and to convert such individuals' Class A units in the CPO's pool to Class B units. (The CPO had previously been granted relief by the Division permitting an exemption claim under Rule 4.7 wit respect to the Class B units of the pool, on the condition that Class B units be sold only to QEPs.) The Division's no-action position also permitted the CPO to add a third class of units.
05/07/1996
96-37 PDF Image; Rule 4.13(a)(1); No-Action
The Division of Trading and Markets granted a limited liability company' (Newco's) managers relief from CPO registration, where a corporation proposed to form Newco and transfer certain of its existing investments to Newco for business and tax restructuring reasons. Without otherwise taking any position on the legality of the transfer of investments, the Division granted relief based upon the manager's familial and long-standing business relationships with Newco's member. The relief is subject to the condition that the managers comply with the provisions of Rule 4.13(b) through (d).
05/06/1996
96-38 PDF Image; Section 4m(1) of the Act; No-Action
The Division of Trading and Markets granted a foreign corporation (X) relief from the CTA registration with respect to an offshore commodity pool, where the corporation licensed a commodity interest trading program to a foreign entity registered as a CTA (Y) that serves as the pool's CTA and who registered AP is a majority shareholder and officer of X. The relief is subject to the conditions that: (1) X will not license, sell or market the program to any person or entity who either directly or indirectly proves commodity interest trading advice to any United States person; (2) Y will not use the program to advice any United States person, except for the three United States persons who currently are investors int he pool; (3) X will not hold itself out as CTA; (4) X will submit to such special calls as the Division may make of it to show compliance with the terms and conditions of this letter; (5) the pool may not solicit or accept any additional United States persons as investors without X first becoming registered as a CTA; and (6) within thirty days of the date of this letter, Y and the pool's registered CPO provide the Division with signed and dated acknowledgments whereby each accepts joint and several liability for any violation of the Act or the Commission's regulations thereunder involving or resulting from X's activities in connection with the program.
05/06/1996
96-39 PDF Image; Section 4d of the Commodity Exchange Act; No-Action
The Division of Trading and Markets provided no action relief to a company so that it did not have to maintain its registration as an IB but could continue to collect "finder's fees" from registered CTAs for accounts that the company had directed to these former CTA-clients. The company withdrew its registration after its sole principal and owner became an employee and registered AP of a client CTA. Since the principal's new employer did not want the company, making it no longer economical for the company to continue its operations. With the departure of its sole principal, the company's only business activity was collecting fees already owed it. Moreover, the company had no follow-up contact with customers for whose accounts the fees were paid, and the company agreed to cease collecting all such fees whose accounts the fees were paid, and the company agreed to cease collecting all such fees within two years of the date of the Division's relief letter. The relief was conditioned on the company's former principal remaining registered with the Commission in some capacity.
05/06/1996
96-40 PDF Image; Rule 3.10; No-Action
The Division of Trading and Markets declined to provide the requested relief to a farmers' cooperative that was also a registered IB which would have allowed members of the cooperative's board of directors to not be listed as principals of the registered entity. The Division stated that the directors of a registered entity are clearly within the definition of principals contained in the Commission rules and therefore must be listed as such and file a Form 8-R and fingerprint card pursuant to Rule 3.10. The Division pointed out, however, that if the cooperative's IB services were provided by a separate entity wholly owned by the cooperative, Rule 3.10 would not require any director who had less than a ten percent ownership interest in the cooperative to file a Form 8-R and fingerprint card, provided that the director had no role in the activities of the registered entity.
05/14/1996
96-42 PDF Image; Section 2(a); No-Action
No-Action letter allowing the Financiele Terminjnmarkt Amsterdam N.V. (FTA) futures contract based on the Eurotop 100 Index to be offered or sold in the United States.
05/14/1996
96-43 PDF Image; Act 4k(3) and 4m(1); Rules 4.14(a)(4) and 4.14(a)(8); No-Action
The Division of Trading and Markets took a "no-action" position relieving a registered CPO and investment adviser from CTA registration while providing commodity interest trading advise to: (1) a registered investment company for which a claim of exemption had been filed under Rule 4.5; (2) an ERISA group trust with respect to which relief similar to that provided by Rule 4.5 had been granted by the Division; (3) seven QECs with respect to which the CPO had asserted exemption from CTA registration pursuant to Section 4m(1); and four pools with respect to which the CPO had asserted exemption from CTA registration pursuant to Rule 4.1(a) (4). The no-action position was conditioned upon conditioned upon continued CPO registration by the CPO, compliance with the recordkeeping requirements of Rule 4.7(b)(2)(ii) with respect to the QECs, and AP registration of each person soliciting (or supervising solicitation) of participants for pools. CPO personnel would be required to register as APs of the CPO in its capacity as a CTA.
05/17/1996
96-44 PDF Image; Act, Section 4m(1); No-Action
The Division of Trading and Markets took a "no-action" position relieving (1) the corporate general partners of two pools organized as Bermuda limited partnership; (2) the directors of such corporate general partners; and (3) the directors of a third pool organized as a British Virgin Islands corporation from the requirement to register as a CPO, where a United Kingdom-registered investment management company (also registered as a CPO and as a CTA) performed the CPO and CTA functions for the pools. The no-action position was conditioned upon maintenance of the management company's CPO and CTA registration, marketing and sale of pool interests only to QEPs (and only by a registered IB and FCM) , and execution of cross-acknowledgments of joint and several liability among the directors, general partners and the management company for violations of the Act and Commission rules.
05/30/1996
96-46 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets granted relief from registration: (1) as a commodity pool operator (CPO) to "X," and (2) as a commodity trading advisor (CTA) to "Y." The relief was granted in connection with "X's" and "Y's" activities with respect of a fund ("Fund"), which invests in certain other investment funds that trade a small portion of their assets in commodity interests ("Investee Funds"). "X" and "Y" were granted relief based upon the following: (1) the four Fund participants are "qualified eligible participants" (QEPs), as defined in Rule 4.7(a)(l)(ii); (2) neither "X," with respect to CPO activities, nor "Y," with respect to CTA activities, engages in such activities in connection with any other funds, pool or account; (3) the Fund will deposit no more than an aggregate of ten percent of Fund net assets in Investee Funds and no Investee Fund will deposit, as initial margin or option premiums for commodity futures or option contracts, more than ten percent to its net assets; (4) "X" will disclose in an offering memorandum the extent of the Fund's participation in commodity futures and options markets, the general risks of such trading and the additional layer of fees payable by Fund participants as a result of the use of the "fund-of-funds" structure; (5) Fund participants will receive quarterly unaudited reports and annual audited reports containing the information required to be given to QEPs under Rule 4.7; and (6) "X" and "Y" agree to make their records pertaining to the Fund available to the Commission.
06/05/1996
96-48 PDF Image; Section 4m(1) of the Act; No-Action
CPO registration relief issued to general partners of 3 commodity pools where, among other things: (1) the general partners were registered as investment advisers and the general partner who would direct the pools' commodity interest trading would be registered as a CTA; (2) the limited partners met a $1 million net worth or $500,000 assets under management requirement; (3) the pools' commodity trading would be incidental to their securities trading; and (4) no pool would commit more than one percent of its assets to establish commodity interest positions. Additional limited partners would need to be either qualified eligible participants or, among other things, have a QEP make its investment decision.
05/02/1996
96-52 PDF Image; Section 4m(1); Rule 4.7(a)(2)(iv); No-Action
The Division of Trading and Markets granted relief from registration to a commodity pool operator (CPO), who will act solely as the "administrative manager" of the Funds. This relief was based upon the conditions that: (1) the registered commodity trading advisor (CTA) of the Funds, who will be acting as the CPO, register as such; (2) the "administrative manager" will not take any part in the solicitation, acceptance or receipt of funds or property from investors to be used for purchasing interests in the Funds, or the investment, use or other disposition of funds or property of the Funds; (3) the CPO/CTA and the "administrative manger" provide a signed and dated acknowledgment wherein each accepts joint and several liability with each other for violations of the Commodity Exchange Act or any regulations thereunder; and (4) any person who acts as an AP of the CPO must be registered as such. Further, the "administrative manger" and the CPO/CTA of the Funds are both wholly-owned by the same parent corporation. In addition, the Division exempted the CPO/CTA from the requirements of Rule 4.7 (a) (2) (iv) to maintain original books and records prepared in connection with its CPO activities in its U.S. office based upon the conditions that: (1) it maintains duplicates of such books and records in its U.S. office; (2) the original books and records are being kept offshore to comply with Internal Revenue Service requirements for relief form U.S. taxation; and (3) the original books and records will be provided to the Commission upon request.
06/26/1996
96-53 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets permitted a registered CPO to claim relief under Rule 4.7(a), notwithstanding the presence of non-QEPs in its pool, where the non-QEPs were established for the purpose of estate planning for QEPs. The QEPs would make all investment decisions for the non-QEPs they had established.
07/23/1996
96-54 PDF Image; Section 2(a); No-Action
No-Action letter allowing the London Securities and Derivatives Exchange Limited's (OMLX) futures contracts based on the OMX Stock Index to be offered and sold in the United States.
06/12/1996
96-55 PDF Image; Section 2, 5, 6, of the Commodity Exchange Act; No-Action
Regarding questions concerning the characterization of certain contracts in foreign currency interests under Section 2 of the Commodity Exchange Act (Act) and the legality of trading in such contracts under Section 5 and 6 of the Act, the Division of Trading and Markets decline to provide any definitive response. Rather, the Division referred the request to various Commission interpretative statements (such as Characteristics Distinguishing Cash and Forward Contracts and ``Trade'' Options) and recent judicial precedent.
07/08/1996
96-56 PDF Image; Section 4m(1) of the Act; No-Action
The Division of Trading and Markets denied a company and its owner's request for relief from CTA registration with regard to producing and distributing materials on commodity interest trading for a fee to students/subscribers as part of a course offered by the company. Although the materials include general information on trading in commodity interests and detailed information on price forecasting using technical analysis, they also provide specific advice on market conditions that signal when persons should trade in the futures markets. In addition, the materials promote the company's hotline and newsletter services as an integral part of the course. The Division concluded that the company is required to register as a CTA and its owner is required to be listed as a principal and registered as an associated person of the company.
07/08/1996
96-57 PDF Image; Rules 4.35(n) & 4.35(a) (7); No-Action
The Division of Trading and Markets denied a registered CTA's request to treat the performance of an account owned by the CTA's mother as though it were the performance of an ordinary client account, and not proprietary trading results within meaning of Rule 4.35(a)(7). The CTA's mother's account was the sole account traded pursuant to the trading program for which the CTA wished to present performance as part of the required performance presentation in its Disclosure Document.
07/23/1996
96-59 PDF Image; Rule 4.7(a)(1)(ii)(B)(2)(xi); No-Action
The Division of Trading and Markets provided no-action relief from the ten percent restriction of Rule 4.7(a)(1)(ii)(B)(2)(xi) that would have prevented a pool, which itself qualified as a QEP but had non-QEP investors, from investing more than ten percent of its assets in a Rule 4.7- exempt pool. The same entity was CPO of both the investor and investee pool, and the investor pool remained subject to all reporting and disclosure requirements of Part 4.
07/22/1996
96-60 PDF Image; Section 4m(1) of the Commodity Exchange Act; Rule 4.5; Rule 4.14(a)(8); No-Action
The Division of Trading and Markets provided no-action relief to a registered investment adviser (IA) , and any affiliate thereof, from the CPO and CTA registration requirements of Section 4m(1) of the Commodity Exchange Act in connection with their solicitation and other activities on behalf of, and advisory services for, a Canadian-organized group trust in which all investors would be Canadian pension plans. Except in limited circumstances (i.e.r because retirees moved from Canada to the United States), the beneficiaries of the pension plans would be Canadian residents, and in no case would the number of United States residents who were beneficiaries of an investor pension plan be more than 3% of a plan's total beneficiaries. Given the foreign organization of the pension plan investors, the pension plans would not be subject to regulation under ERISA, and thereby IA as CPO and CTA to the group trust would not be eligible respectively for registration exemptions pursuant to Rule 4.5 (or Division no-action relief extending this exemption to trusts consisting entirely of U.S. pension plans subject to ERISA) and Rule 4.14(a)(8). Nevertheless, the IA affirmed that although the group trust was not eligible for treatment under Rule 4.5, the investment strategies employed on behalf of the group trust would be consistent with the requirements of Rule 4.5. The Division also provided no-action relief from the CPO registration requirements to the trustee of the group trust, which was a Canadian subsidiary of a U.S. company.
08/06/1996
96-61 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets permitted a registered CPO to claim relief under Rule 4.7(a), notwithstanding the presence of non-QEPs in its pool, where the non-QEPs were managing group members and key employees, all of whom are experienced professionals in the consulting business.
08/25/1996
96-63 PDF Image; 4m(1); No-Action
The Division of Trading and Markets granted relief from registration as a commodity pool operator to the US director of certain offshore funds here the director: (1) was the only US director; (2) was registered as an associated person with the Commission; (3) agreed to maintain a duplicate copy of the funds' books and records at his business office in the US
08/12/1996
96-64 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets permitted a registered CPO to claim relief under Rule 4.7(a), notwithstanding the presence of non-QEPs in its pool, where the pool invests primarily in mortgage-backed securities and the non-QEPs are members of the CPO or experienced employees of a registered CTA that is owned by the persons who own the CPO. In addition, the Division granted the CPO's request to permit another non-QEP investor, the father of one of the pool's managing members, to receive an assignment of a portion of the return that the member will receive on his investment in the pool.
08/13/1996
96-65 PDF Image; 4.7(a), 4.7(a)(1)(ii)(B)(2)(xi); No-Action
The Division of Trading and Markets permitted the CPO of a 4.7 pool to continue to claim exemptive relief under Section 4.7 despite the participation of a non-QEP individual where the non-QEP was a medical doctor and accredited investor, had over $300,000 invested in two other investment funds managed by the pool's CTA and was fully familiar with the investment activities of the pool. In addition, the CPO of the pool, wher the pool was a QEP, was permitted to invest more than 10% of the Fund's assets in other 4.7 exempt pools, despite the non-QEP's participation.
06/14/1996
96-66 PDF Image; 4m(1), 4.7(a); No-Action
The Division of Trading and Markets granted releif from registration as a CPO to the sole general partner of several U.S. Funds to be operated as 4.7 pools where the Funds' CTA will also register as a CPO and serve in both capacities, the general partner and the CPO/CTA are affiliated companies, the general partner will limit its activities with regards to the Funds, and the CPO/CTA and general partner accepted joint and several liablity for each other's action. In addition, the Division pemitted the CPO/CTA to claim exempt status for the Funds despite the participation of three non-QEP individuals in a Fund, where the non-QEPs are high level employees of the CPO/CTA and sophisticated investors.
09/13/1996
96-68 PDF Image; Rule 1.46; No-Action
The Division of Trading and Markets (Division) gave "no-action" relief pursuant to which the Division permitted a registered CTA to use separate trading programs to trade multiple accounts for the same commodity pool, without requiring the FCM handling such pool's accounts to close out offsetting positions generated for the accounts of any such pool as a result of the operation of the separate trading programs. The relief was generated even through the CTA did not clearly demonstrate that it separately marketed the separate trading programs involved. The Division's "no-action" position was conditioned upon, inter alia, prior written consent of the pool's CPO and/or trading manager, as well as inclusion in the CPO's Disclosure Document of a paragraph explaining these circumstances and the potential for incurring extra costs to be borne by the pool.
09/30/1996
96-69 PDF Image; Rule 4.7(a); No-Action
The Division of Trading and Markets permitted a registered CPO to claim relief under Rule 4.7(a), notwithstanding the presence of non-QEPs in its pool, where the pool invests primarily in United States securities and the non-QEPs are sophisticated investors, three of whom are accredited investors and one of whom has a net worth of approximately $865,000. One of these non-QEPs also is the uncle of a securities trader for the pool's co-investment manager, and another is the father of the securities trader's assistant. As the pool no longer will be operated pursuant to the criteria of Rule 4.12(b), the Division based its relief upon, among other things, the CPO notifying each QEP and non-QEP that the pool may invest more than ten percent of its assets in commodity interests.
09/04/1996
96-75 PDF Image; Rule 4.7 - QEP criteria and 10% investment limitation. section 4m(1) - CPO and CTA registration.; No-Action
The Division of Trading and Markets permitted an employee limited partnership to be treated as a QEP for the purpose of investing in a pool operated by an affiliate of the employees' employer. Trading and Markets also issued CPO and CTA registration no-action relief to the operator and advisor of the employee limited partnership. This relief was based upon, among other things, representations that participants in the employee limited partnership would be restricted to senior management officials who were "accredited investors.
10/21/1996
96-76 PDF Image; Section 4m(1) of the Act; No-Action
The Division of Trading and Markets provided relief to an investment adviser (IA) registered under the Investment Advisers Act of 1940 from the CPO and CTA registration requirements of section 4m(1) of the Commodity Exchange Act in connection with IA's limited operational role in providing commodity futures advisory services to an off-shore fund. No shares in the fund would be offered to United States persons as defined in regulation S under the Securities Act of 1933. Trading in commodity futures interests would be limited to trading in currency futures and options thereon for hedging purposes and consistent with criteria set forth in Commission rule 4.5.
10/28/1996
96-78 PDF Image; Section 4d(2) of the Act; rules 1.20-1.29 thereunder; rule 1.55; No-Action
A contract market proposed the establishment of two separate limited liability company accounts, with an outside entity to act as custodian and investment manager. These accounts would allow clearing members on a voluntary basis to direct that customer funds and, separately, proprietary funds deposited with the clearing organization be placed in the limited liability company accounts. Although the investment guidelines for the program would limit investments by the limited liability companies to instruments generally permissible under section 4d(2) of the Act and rules promulgated thereunder with respect to customer funds, since interests in limited liability companies themselves are not specified in the Act or rules as permissible investments, the Division of Trading and Market issued the contract market a no-action letter concerning this program. This position was based upon, among other things, the contract market's guarantee of the return of principal invested by clearing members in the limited liability companies and the booking of its obligations to participants as a direct obligation of the contract market, and the participants booking the asset as a cash obligation rather than as a security, as well as other recordkeeping and reporting requirements.
11/01/1996
96-80 PDF Image; Rule 4.14(a)(6) and 4.31; No-Action
The Division of Trading and Markets denied an introducing broker's (IB) request for relief from registration as a commodity trading advisor (CTA) under rule 4.14(a)(6) where the IB offered a fee-based hotline service to potential and existing accounts, but made it possible for a non-client to continue to access the hotline without ever becoming a client. The IB was required to either cease providing the hotline service to non-clients or to register as a CTA. If he registered as a CTA, the Division stated that it would not recommend an enforcement action be brought against the IB under rule 4.31 based solely upon a failure to provide a Disclosure Document to existing clients for whom he directed or guided accounts, but if he solicited or entered into an agreement to direct or guide any new account, he would have to provide a Disclosure Document to that client, as well as to existing clients to whom he directed or guided accounts,
11/20/1996
96-83 PDF Image; Rule 4.21; No-Action
The Division of Trading and Markets took a "no-action" position permitting a registered commodity pool operator (CPO) to use summary disclosure materials containing more information than the notice of intended offering and statement of terms of offering contemplated by rule 4.21(a), but not containing all of the information required by rule 4.24, to solicit qualified eligible participants (QEP) for a pool in which non-QEPs also participate. A copy of the CPO's full Disclosure Document will be provided to each such solicited QEP upon request or at the time such solicited QEP elects to purchase an interest in the pool. In any event, a full Disclosure Document will be delivered before funds, securities or other property are received by the CPO from any such solicited QEP. The "no-action" relief was conditioned upon the QEP status of such prospective participants, and upon maintenance by the CPO of records substantiating the qualifications of such QEP prospects, which records will be made available to representatives of the Commission.
12/03/1996
96-84 PDF Image; Rule 4.5 and 4.14(a)(8); No-Action
The Division of Trading and Markets granted a request by a registered investment adviser for confirmation that, subsequent to its registration as a CPO/CTA, it may continue to rely on Rules 4.5 and 4.14(a)(8), insofar as they provide relief from certain regulatory requirements of Part 4, other than antifraud prohibitions, with respect to its Rule 4.5-eligible clients. In addition, the Division confirmed that persons who exclusively solicit interest in Rule 4.5-eligible entities or discretionary accounts of Rule 4.5-eligible entities, and supervisors of any such activity, will not be subject to registration as APs under Rule 3.12(h)(3)(ii)(B) solely on the basis of such activities.
12/04/1996
96-85 PDF Image; Rule 1.57(a)(1); No-Action
The Division of Trading and Markets granted a request by a guaranteed IB to permit its guarantor FCM to provide execution but not clearing services for certain institutional customers. The IB has a business relationship only with its guarantor FCM, the guarantor FCM is substantially capitalized and the guarantor FCM reaffirmed that it accepts joint and several liability as provided in the Guarantee Agreement it executed with the IB. In addition, the IB agreed to limit to $2 million the amount of money, securities, or property (or credit extended in lieu thereof) required by FCMs other than its guarantor FCM from these institutional customers to margin these "give-up" trades in commodity interest contracts.
11/25/1996
96-86 PDF Image; Section 1.3(y); No-Action
FCM was not required to reclassify an account from customer to proprietary after the FCM's ultimate parent company acquired a minority interest in the parent company of a customer of the FCM where, among other things: (1) the FCM's ultimate parent is prohibited from acquiring a controlling interest in the customer's parent as a matter of law; (2) none of the customer's trading is funded or handled by the FCM's ultimate parent; and (3) the FCM does not hold customer funds at the customer, the customer's parent or any subsidiary of the customer's parent.
12/24/1996
97-13 PDF Image; Section 4d(2); No-Action
The Division of Trading and Markets would not recommend that the Commission take any enforcement action against an introducing broker (IB) based solely on the IB's failure to register as an FCM where the IB effects a customer's transfer of funds from the customer's securities account to the customer's commodity interest account by the IB drawing a check from the securities account payable to the commodity interest account and depositing the check into the customer's commodity interest account. Relief was conditioned upon the IB's ability to provide certain documentation to the Commission's and the National Futures Association's auditors.
11/27/1996
97-14 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets would not recommend that the Commission bring an enforcement action for failure to register against a commodity trading advisor (CTA) that was organized in the United Kingdom and registered with the Securities and Futures Authority. Two of the three owners of the no-actioned CTA were listed with the Commission as principals of a registered CTA, and the third was in the process of registering as an AP of the registered CTA. Relief was conditioned upon receipt by the Division of joint and several liability acknowledgments executed by the no-actioned CTA and the registered CTA.
09/11/1996
98-31 PDF Image; Sections 4, 5 and 6 of the Commodity Exchange Act; No-Action
The Off-Exchange Task Force of the Commodity Futures Trading Commission has issued a no-action letter recommending that the Commission not take enforcement action against certain individuals for operating, or participating in, a physical delivery electronic natural gas trading system. Trading on the system is limited to qualified commercial participants, and transactions executed on the system impose binding physical delivery obligations on the participants. The Off-Exchange Task Force has determined that the operation of this physical delivery trading system does not require designation as a contract market, registration under the Commodity Exchange Act (Act), or compliance with the Act or Commission Regulations.

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