For Release: April 11, 1996
Offshore Commodity Pools
Relief for Certain Registered CPOs
From Rules 4.21, 4.22 and 4.23(a)(10) and (a)(11)
From the Location of Books and Records Requirement
of Rule 4.23
By this Advisory, the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission") is making generally available to qualifying commodity pool operators ("CPOs") relief that the Division previously has issued on a case-by-case exemptive basis with respect to registered CPOs who operate offshore commodity pools. The Division will continue to evaluate on a case-by-case basis requests for relief that do not meet the criteria set forth below.
A.Relief for Certain Registered CPOs from Disclosure, Reporting and Certain Recordkeeping Requirements in Connection with the Operation of Offshore Commodity Pools. A registered CPO who operates an offshore commodity pool may claim relief from the disclosure, reporting and recordkeeping requirements of Rules 4.21, 4.22 and 4.23(a)(10) and (a)(11), respectively, through the filing of a notice of a claim for exemption with the Division that sets forth the following representations:
1.The CPO claiming the relief is registered as a CPO with the Commission;
2.The commodity pool is, and will remain, organized and operated outside of the United States;
3.The commodity pool will not hold meetings or conduct administrative activities within the United States;
4.No shareholder of or other participant in the commodity pool is or will be a United States person;
5.The commodity pool will not receive, hold or invest any capital directly or indirectly contributed from sources within the United States; and
6.The CPO, the commodity pool and any person affiliated therewith will not undertake any marketing activity for the purpose, or that could reasonably be expected to have the effect, of soliciting participation from United States persons.
The content and filing procedures for such notices are discussed in Section C, infra.
B.Relief For Certain Registered CPOs from Location Requirement of Offshore Pool's Original Books and Records. A registered CPO whose main business office is within the United States and who operates a commodity pool that has its main business office outside the United States may claim relief from the requirement of Rule 4.23 that a registered CPO maintain the original books and records of its commodity pool at its main business office through the filing of a notice of a claim for exemption with the Division that sets forth the following representations:
1.The CPO will maintain the original books and records of the commodity pool at the main office of the commodity pool located outside the United States;
2.The CPO desires to maintain such books and records outside the United States in furtherance of compliance with Internal Revenue Service ("IRS") requirements for relief from United States federal income taxation;
3.The CPO will maintain duplicate books and records of the commodity pool at a designated office in the United States; and
4.Within 72 hours after the request of a representative from the Commission, the United States Department of Justice or the National Futures Association ("NFA"), the original books and records will be provided to such representative at a place located in the United States that is specified by the representative.
Filing a notice of a claim for exemption under this Section B of the Advisory, however, does not eliminate the requirement to comply with the location of the CPO's own books and records under Rule 4.23(b), or, in the case of a CPO of a Rule 4.7 exempt pool, the location requirement for the CPO's own books and records under Rule 4.7(a)(2)(iv).
C.Filing of a Notice of a Claim For Exemption.
A CPO may claim: (1) all of the relief made available by this Advisory, which may be claimed through one notice which makes the representations set forth in Sections A and B above; (2) relief solely from Rules 4.21, 4.22 and 4.23(a)(10)and (a)(11), as set forth in Section A; or (3) relief solely from the Rule 4.23 requirement regarding location of a pool's books and records, as set forth in Section B.
Any notice of a claim for exemption filed for relief pursuant to this Advisory must:
1.Be in writing;
2.Provide the name, business address, business telephone number and the NFA identification number of the CPO(s) claiming the relief;
3.Provide the name(s) of the commodity pool(s) for which the request is made;
4.Contain representations that neither the CPO nor any of its principals is subject to any statutory disqualification under Section 8a(2) or 8a(3) of the Act unless such disqualification arises from a matter which (a) was previously disclosed in connection with a previous application for registration if such registration was granted, or (b) was disclosed to the Commission or the NFA more than thirty days prior to the filing of this notice;
5.(a) Specify the rules from which the CPO seeks relief and make the representations set forth above (i.e., those in Section A, subparagraphs 1 through 6, or those in Section B, subparagraphs 1 through 4) required for obtaining such relief; and
(b) Where relief is requested pursuant to Section B of this Advisory, provide the name, title, full mailing address, telephone number and relationship to the commodity pool of the person who will have custody of the pool's original books and records and the location outside the United States where those books and records will be kept;
6.Be signed by the CPO as follows: if a sole proprietorship, by the sole proprietor; if a partnership, by a general partner; and if a corporation, by the chief executive officer or chief financial officer; and
7.Be filed in duplicate with the Commission and the NFA at the headquarters addresses set forth below:
Commodity Futures Trading Commission
(Attn: Office of the Chief Counsel)
Division of Trading and Markets
1155 21st Street, N.W.
Washington, D.C. 20581
National Futures Association
(Attn: Director of Compliance, Com- pliance Department)
200 West Madison Street
Chicago, Illinois 60606-3447.
A notice of a claim for exemption must be filed with the Division prior to the date upon which the CPO filing such notice intends to operate pursuant to the terms of the relief available. The notice will be effective upon filing, provided that the representations set forth therein are valid and accurate. An exemption claimed hereunder will cease to be effective upon any change which would render the representations set forth in the notice of a claim for exemption inaccurate or the continuation of such representations false or misleading. Each person who has claimed relief hereunder, in the event that any of the information contained or representations made in the notice of a claim for exemption changes or becomes inaccurate or incomplete, must file a supplemental notice with the Commission to that effect which, if applicable, includes such amendments as may be necessary to render the notice of a claim for exemption accurate and complete. Such supplemental notice must be filed within fifteen business days after the occurrence of the relevant event.
Notwithstanding any notice of a claim of exemption filed under this Advisory, persons claiming such relief remain subject to all other applicable requirements contained in the Act and the Commission's regulations issued thereunder, including, without limitation, the antifraud provisions of Sections 4b and 4o of the Act, the reporting requirements for traders set forth in Parts 15, 18, and 19 of the Commissions regulations, and all other provisions of Part 4.