Release: 4721-02
For Release: November 6, 2002


WASHINGTON, D.C. -- The Commodity Futures Trading Commission (CFTC) is providing relief from its registration requirements to permit certain operators and advisors of pooled investment vehicles to utilize single-stock futures and other futures contracts in their investment and risk management strategies without having to register with the Commission.

In an Advance Notice of Proposed Rulemaking (ANPR), the Commission has said that, pending the issuance of final rules in this area, it will not pursue enforcement actions against certain operators and advisors of pooled investment vehicles for not registering with the Commission prior to utilizing futures contracts.

This registration relief is available if a pooled investment vehicle restricts participation to persons that are accredited investors, knowledgeable employees, or non-U.S. persons and limits its futures activity to positions with notional values not exceeding half the liquidation value of the pool’s portfolio. To take advantage of this relief, a pool operator or trading advisor must notify the National Futures Association (NFA) and provide a standard disclosure to pool participants stating that it is not registered with the Commission.

The ANPR also requests public comment on proposals by the NFA and the Managed Funds Association (MFA) to implement permanent rule changes expanding the categories of pools whose operators and advisors need not register with the Commission. Currently, the Commission’s rules provide exemptions for certain very small pools and for certain otherwise regulated entities, such as mutual funds, insurance companies, and pension funds. The NFA and MFA proposals would add a new category for pools that limit participation to certain sophisticated investors.

Chairman James Newsome commented that “Last year, the Commission succeeded in modernizing our rules for trading facilities. Now, we’re moving ahead on several fronts with rule modernization for intermediaries, as directed by Congress through the Commodity Futures Modernization Act. Security futures, like other futures contracts, can provide important risk management tools for portfolio managers. As always, I look forward to receiving the comments of market participants and other concerned observers as this rulemaking progresses.”

The ANPR is being published in the Federal Register for a 60-day comment period and the no-action relief will remain in effect until the Commission takes final action in this area. Copies of the ANPR, which includes the “no-action” position, can be obtained by contacting the Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, DC 20581, (202) 418-5100 or by accessing the Commission’s website,

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