For Release: March 3, 2000
COMMODITY FUTURES TRADING COMMISSION
REVISIONS TO RULE 4.7
Washington, D.C. The Commodity Futures Trading
Commission announced today that is proposing changes to Rule 4.7. This rule
provides a simplified regulatory framework for commodity pool operators (CPOs)
operating commodity pools consisting of certain highly accredited pool
participants, termed "qualified eligible participants (QEPs), and for commodity
trading advisors (CTAs) directing or guiding the commodity interest trading
accounts of certain highly accredited clients, termed "qualified eligible
clients" (QECs). The proposed changes would revise the rule both substantively
The proposed substantive revisions are intended to make Rule 4.7 available to more CPOs and CTAs in more situations, by bringing within the scope of the rule those additional persons whom the Commission now believes should be included in the QEP and QEC definitions. These revisions would add, among others, the following persons to the existing QEP and QEC definitions: (1) principals of the registered investment professionals currently defined as QEPs and QECs; (2) certain registered securities investment advisers and their principals; (3) "qualified purchasers" and "knowledgeable employees" as those terms are defined under the federal securities laws; (4) certain employees of pools, CPOs and CTAs and certain of those employees' immediate family members; and (5) trusts whose advisors and settlors are QEPs or QECs. In addition, the revisions would make it easier for certain charitable organizations, trusts and collective investment vehicles to be QEPs and QECs, and, under certain circumstances, it would include persons who are not "United States persons" in the QEC definition. Certain of the proposed technical revisions, i.e., those which would reorganize the rule, are intended to facilitate a determination of whether a person is (or is not) a QEP or a QEC. Other proposed technical revisions would conform various references in the existing rule to those in the proposed rule.
The proposed revisions to Rule 4.7 were published in the Federal Register on March 2, 2000 at 65 Fed. Reg. 11253. In light of the breadth of the proposed revisions, the Federal Register release contains the entire text of Rule 4.7 as it would appear if the Commission's proposed amendments were adopted and a chart that compares the provisions of the proposed rule with the provisions of the existing rule. Public comment on the proposed revisions must be received on or before May 1, 2000.
A copy of the Commission's Notice of Proposed Rulemaking can be obtained by contacting the Commission's Office of Secretariat, Three Lafayette Centre, 1155 21st St. N.W., Washington, D.C. 20581, (202) 418-5100. The Notice of Proposed Rulemaking also is available on the Commission's website at http://www.cftc.gov/.