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Other Written Communication

Other Written Communication
01-35 PDF Image; Section 4m(1) and Rule 4.14(a)(9); Other Written Communication
The Division of Trading and Markets addressed questions concerning the operator of a website that would be operated initially as strictly informational, and subsequently as a manager of customer accounts. The Division advised that the operator would likely be ineligible for the registration exemption under Section 4m(1) even if less than 15 accounts were managed, due to the "holding out" arising from an Internet presence. Without more information no answer could be given whether an investor who contacts the website operator is considered to have been solicited. The website operator was advised to register as a CTA before managing any accounts, and was referred to the Division's July 22 1997 Interpretation regarding electronic delivery of disclosure and other materials. He was further advised that registering for the purpose of managing accounts would probably vitiate any exemption under Rule 4.14(a)(9) and that clients cannot be solicited prior to registration. The Division clarified the handling of performance data pre-dating the disclosure document by more than five years and for which no records exist. Finally, the Division said it has no objection to the use by dual CFTC/SEC registrants of a single disclosure document, and referred the writer top NFA for any questions regarding simultaneous compliance with CFTC and SEC disclosure rules.
01-40 PDF Image; Part 34 of the Commission's rules and Section 105(a) of the Commodity Futures Modernization Act; Other Written Communication
The Division of Trading and Markets (Division) issued a reply treating as withdrawn a Petition seeking confirmation that a particular product qualified for exemption from the Commodity Exchange Act and rules thereunder as a hybrid instrument. The Division's reply was based upon the self-effectuating nature of the newly-enacted exclusion from regulation for hybrid instruments that are predominantly securities set forth in Section 105(a) of the Commodity Futures Modernization Act. The Division also advised the requester to seek advice from the SEC on the issue of whether its hybrid instruments satisfy the predominance test and should be registered as securities.
01-60 PDF Image; Rules 4.41(b), 4.35(a)(6) and 4.35(a)(7); Other Written Communication
The Division of Trading and Markets addressed questions concerning requirements applicable to certain hypothetical and proprietary presentations on a CTA's website. The Division advised that while Rule 4.41(b) requires that a prescribed cautionary statement accompany hypothetical results, the rule permits that either the statement specified therein, or a statement prescribed by a registered futures association, may be used. The Division also clarified the application of Rules 4.35(a)(6) and 4.35(a)(7) regarding the computation and presentation of proprietary performance, including pro-forma adjustments to reflect fees, commissions, and expenses that differ from the program offered to clients.
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.
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).
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.
04-29 PDF Image; Section 17 - Registered Futures Associations: Application Procedures; Other Written Communication
The Division of Clearing and Intermediary Oversight declined to remove information about employment with a disciplined firm from an associated person's (AP's) registration record. The AP argued that he had not actually accepted employment or started working for the disciplined firm. In refusing the AP's request, the Division noted that the NFA registration file information was factually correct, would not prevent the AP from working as an AP, and could be accompanied by an explanatory statement submitted by the AP.
07-09 PDF Image; Section 4m(1) of the Commodity Exchange Act; Other Written Communication
For the reasons provided, the Division of Clearing and Intermediary Oversight denied a request to reconsider the conditions for relief set forth in CFTC Staff Letter 05-22.
07-12 PDF Image; Regulation 4.7; Exemption; Other Written Communication
The Division of Clearing and Intermediary Oversight granted in part and denied in part a request for exemptive relief from the requirement that all participants in a Regulation 4.7 exempt pool must be QEPs at the time they invest in the pool. The CPO had converted the pool to a Regulation 4.7 exempt pool but had permitted two non-QEPs to continue to participate in the pool. The Division granted exemption with respect to one participant who had been principal of the CPO at the time the pool was converted, but before the Commission had amended the QEP definition to include a CPO’s principals. Relief was denied with respect to a non-QEP that did not meet any of the definitional criteria, and the CPO was given 60 days either to demonstrate that it had been (and would continue to be) in full compliance with Part 4 with respect to the non-QEP, or to redeem the non-QEP’s interest in the pool.
08-17 PDF Image; 1.17, 1.20, 1.25 and Part 30; Other Written Communication
DCIO received a request for guidance from the Joint Audit Committee concerning FCM regulatory reporting requirements for investments in a money market mutual fund. The fund had announced that its net asset value per share had fallen from $1.00 and that, as permitted by order of the SEC dated September 22, 2008, the fund had suspended redemptions and postponed payments. DCIO advised that until further notice the investments should be reported as of certain dates at the net asset values specified in the letter, and continue to be subject to a 2% deduction when calculating adjusted net capital.
10-35 PDF Image; CEA Sections 4f(a)-(c), 4g(a), 4g(c), and 4g(d); Commission Regulations 1.55, 1.14, 1.15, 1.17(a)(1)(i)(B), and 1.31; Other Written Communication
This letter withdraws relief previously granted in staff letters 02-22, 02-90 and 06-20. The previous letters provided “no-action” relief to registered securities broker-dealers and their registered representatives in connection with their offer and sale of certain futures contracts. The Division determined to withdraw the relief on a prospective basis based primarily on consumer protection issues including the uncertain treatment of customer funds in the event of insolvency of a broker.
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).