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No-Action Letters

Date
No-Action Letters
12/09/1999
00-22 PDF Image; Section 2(a); No-Action
No-Action letter allowing the Montreal Exchange's futures contract based on the S&P/TSE 60 Stock Index to be offered or sold in the United States.
11/29/1999
00-43 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets took a CPO registration "no-action" position with respect to a limited liability company (formed by a consortium of financial institutions) which became the general partner of two of the elements of a severely distressed major hedge fund system in order to provide a conduit for a substantial cash infusion by the consortium to enable the orderly liquidation of the hedge fund system's remaining market positions. The initial request for confirmation that CPO registration was not required was denied (Staff Letter 99-23) and that denial was subsequently reaffirmed. Upon reconsideration, in light of the disclosure of additional facts (including the redemption of all investors other than the limited liability company, and the imminent completion of the liquidation process), the Division determined that a no-action position was appropriate.
03/03/1999
99-14 PDF Image; Section 4 of the Act; No-Action
In light of the Commission's ongoing rulemaking process concerning automated trading systems, the Division of Trading and Markets (Division) declined to extend the Division's no-action letter of February 29, 1996, concerning the placement of Eurex electronic terminals in the U.S. to allow the trading of Euribor and Euro-Libor futures and option contracts on Eurex's U.S.-located terminals.
04/05/1999
99-17 PDF Image; Rule 4.35(a)(7) and 4.34(n); No-Action
The Commission denied inclusion of proprietary trading results in a composite table of customer accounts. Tables must be restated for all periods where the accounts are proprietary in nature. Proprietary accounts are those accounts belonging to any person associated with any FCM, IB, CTA, CPO or Leverage Transaction Merchant as a partner, officer, employee, consultant or agent.
04/27/1999
99-22 PDF Image; Rule 4.35(a)(7) and 4.34 (n); No-Action
the Commission denied a rule change or exemptive relief to enable this firm to consider a solely owned IRA and an account owned majoraly by a sibling as non-proprietary. Proprietary accounts are those accounts belonging to any person associated with any FCM, IB, CTA, CPO or Leverage Transaction Merchant as a partner, officer, employee, consultant or agent.
07/14/1999
99-25 PDF Image; Section 2(a); No-Action
No-action letter allowing the Hong Kong Futures Exchange Limited (HKFE) futures contract based on the HKFE Taiwan Index to be offered or sold in the United States.
07/07/1999
99-26 PDF Image; Rule 1.35(a-1)(5) - Orders Eligible for Post-Execution Allocation.; No-Action
The Division of Trading and Markets issued a no-action position to a registered CTA to permit it to treat a commodity pool with assets of less than $5,000,000 as an eligible customer for purposes of bunched orders placed, executed, and allocated pursuant to Rule 1.35(a-1)(5). The no-action position was issued based upon representations that: 1) the CTA will employ an electronic block order allocation system, which uses an average price methodology, for the allocation of orders executed pursuant to Rule 1.35(a-1)(5) and allocated on a post-execution basis; 2) the CPO of the commodity pool also acts as the CPO of a pool which meets the assets requirement and satisfies the definition of a QEP in Rule 4.7; and 3) participants in the pool are current and former employees of the CTA or its affiliates or immediate family members of employees of the CTA.
07/14/1999
99-27 PDF Image; Rule 4.7 (Exemption) and Rule 1.56 (No-Action); No-Action; Exemption
The Division permitted a CPO to claim relief under Rule 4.7 with respect to a commodity pool that had both QEP and non-QEP participants based upon, among others, representation that: 1) 93% of the capital of the participants in the Partnership was attributable to QEPs; and 2) the non-QEPs would not participate in investments by the Partnership in commodity interests, would not share in any profits and losses from the Partnership's commodity interest trading and would not have any Partnership assets allocable to them subject to claim by the Partnership's FCM. While not having non-QEP assets subject to claim by the FCM might implicate Rule 1.56, based upon such factors as the purpose of that rule, the nature of the arrangement and the capitalization of the parties to the arrangement, the Division took a "no-action" position under Rule. 1.56 with respect to the FCM.
07/09/1999
99-28 PDF Image; Section 4d of the Act; No-Action
The Division of Trading and Markets (Division) declined to grant an FCM's no-action request regarding introducing broker (IB) registration requirements as applied to grain elevators with which the FCM wished to enter into a fee-splitting arrangement. Specifically, the FCM wanted to split the flat fee paid by a customer of the FCM's agricultural marketing service with the grain elevator that originally referred the customer to the FCM's service. The agricultural marketing service helped agricultural producers develop individualized marketing plans for those agricultural products that could be hedged using exchange-traded futures and options contracts. The Division noted that given positions set forth in previous no-action and interpretative letters, the grain elevators, in referring customers to the FCM for compensation, would be engaged in behavior that constituted indirect solicitation of customer orders and required them to register as IBs, even though the users of the market services were under no obligation to open a trading account with the FCM or use futures or options in marketing their agricultural products.
07/14/1999
99-30 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets issued a no-action position to a co-general partner of a commodity pool, relieving the co-general partner from the duty to register as a CPO. The Division took this position because, among other things: (1) the other general partner was already registered as a CPO; (2) the other general partner represented that it would undertake all CPO responsibilities, and the co-general partner's activities would be limited to providing advice on investments not subject to regulation by the Commission; (3) the other general partner was the sole shareholder, president, and employee of the co-general partner; and (4) the other general partner would be jointly and severally liable with the co-general partner.
09/15/1999
99-43 PDF Image; Section 4m(1) - No-Action Position from CPO Registration; No-Action
The Division of Trading and Markets (Division) issued a CPO registration no-action position to the General Partner of a Partnership that serves as a collective investment vehicle for immediate family members and one long-term advisor to the family where the Partnership is the sole collective investment vehicle trading commodity interests that is being operated by the General Partner. The Division also confirmed that while the General Partner will become a CTA, the General Partner is exempt from registration pursuant to Section 4m(1) of the Act inasmuch as it is not holding itself out to the public as a CTA and is providing advice as to the value of or the advisability to trading commodity interests to less than 15 persons.
09/15/1999
99-45 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets issued a CPO registration no-action position to the operator of a fund where: (1) each member is effectively an immediate family member or long-term associate of another member; (2) two of the three non-managing members of the fund are registered CPOs; and (3) the third non-managing member is a spouse of one of the other non-managing members.
09/29/1999
99-46 PDF Image; Section 4m(1) of the Act; No-Action
The Division of Trading and Markets issued a CPO registration no-action position to the general partners of a general partnership based upon representations, among other things, that: (1) the general partners were established by family members of estate planning purposes, particularly for providing charitable contributions; (2) each family member was or is a QEP; and (3) all general partners have equal access to the books and records of the partnership. The Division also issued a CTA registration no-action position to the adviser of the partnership based upon, among others, representations that: (1) the sole business of the adviser is to make all of the investment decisions for, and manage the assets of, the partnership and other family partnerships; (2) the adviser is wholly owned by a company whose sole business is to provide financial and investment management services to members of the family; (3) each shareholder of the company is a family member, a direct lineal descendent of a family member or a brother of four of the family members and his direct lineal descendents; (4) nine of the directors of the company also are shareholders of the company; (5) two of the directors of the company are the spouses of shareholders of the company; and (6) the remaining two directors of the company have been employed by the company and the adviser for over five and one-half years. The partnership would invest in, and the adviser would provide advice on investing in, commodity pools operated by registered CPOs.
10/07/1999
99-47 PDF Image; Section 4d(c) of the Act -- No-Action Position from FCM Registration; No-Action
The Division of Trading and Markets issued an FCM registration no-action position to a registered IB and broker-dealer in order to permit it to effect the transfer of funds between its customers' securities and commodity interest accounts upon oral request from its customers where: (1) the customers have provided pre-authorization in writing permitting the transfer of funds both ways between their commodity interest and securities accounts; (2) less than one percent of the IB's total revenue is derived from commodity interest-related activity; and (3) the IB is not advertising its commodity interest-related activity but instead is offering these services to existing securities customers merely as a courtesy. The relief was granted on condition that the IB adopt certain specified procedures designed to safeguard those customer funds required to be segregated, including detailed recordkeeping requirements concerning any transfer of funds.
12/06/1999
99-56 PDF Image; Section 4m(1); No-Action
The Division of Trading and Markets issued a no-action position to an investment adviser that provides limited commodity trading advice to two foreign funds, relieving the adviser of the duty to register as a CTA. The Division took this position because, among other things: (1) the funds are organized outside of the United States: (2) shares in the funds will not be owned by or transferred to any United States person; (3) the funds' stated investment strategies are to invest primarily in equity securities; (4) the adviser is already regulated by the SEC as an investment adviser registered under the Advisers Act; (5) the funds will be operated in a manner consistent with the requirements of Rule 4.5(c)(2), and the adviser will comply with the requirement of Rule 4.14(a)(8) with respect to the manner in which commodity interest trading advice is provided to the funds; and (6) at the Division's request, the adviser will provide the Division with information demonstrating the adviser's compliance with the terms and conditions of the Division's no-action position.
12/17/1999
99-63 PDF Image; Sections 5 and 5a of the Act; No-Action
The Division of Trading and Markets (Division) issued a letter granting no-action relief to permit the Singapore International Monetary Exchange Limited (SIMEX) to make its electronic trading and order matching system, known as SIMEX ETS, available to its members in the US without obtaining contract market designation pursuant to Sections 5 and 5a of the CEA.
12/06/1999
99-64 PDF Image; CEA ?? 4d, 4f(b), Regulation 1.57(a); No-Action
The Division of Trading and Markets will not recommend that the Commission institute an enforcement action against a guaranteed IB if the IB introduces to its guarantor FCM certain institutional customers who employ the FCM's execution services but choose to clear their transactions with other FCMs. This no-action position does not affect any other duties or responsibilities of the IB or the FCM, and is subject to certain conditions, including a limit on volume of trading cleared through non-guarantor FCMs.
12/16/1999
99-67 PDF Image; Section 5 of the Act; No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit the operation and use of an automated system for buying and selling electricity for delivery in the future, without the system operator obtaining contract market designation pursuant to Section 5 of the Act.
11/12/1999
99-69 PDF Image; Section 5 and 5a of the Act; No-Action
The Division of Trading and Markets issued a letter granting no-action relief to permit the International Petroleum Exchange of London Limited 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 Section 5 and 5a of the CEA.

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