CFTC Staff Letters

The Division of Clearing and Intermediary Oversight provided no-action relief to the general partner of a commodity pool from registering as a CPO under Section 4m(1) of the Commodity Exchange Act, and allowed an affiliated, registered CPO (“designee”) to serve as the CPO of the pool instead, where, among other things: (1) the general partner and the designee are under common ownership and control; (2) the general partner has delegated all of its management authority to the designee; (3) the general partner does not engage in the solicitation of investors for the pool and does not manage property of the pool; and (4) the general partner and designee executed and submitted to the Division a written acknowledgement of joint and several liability for any violation by either of them of the Act or the Commission’s regulations.

No-Action relief request of BM&F Bovespa S.A. – Bolsa de Valores, Mercadorias e Futuros, in connection with the offer and sale in the United States of its futures contracts based on the Ibovespa Index.

The CPO of commodity pool requested relief to use IFRS in lieu of US GAAP. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of commodity pool requested relief to use IFRS in lieu of US GAAP. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of commodity pool requested relief to use IFRS in lieu of US GAAP. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to the trustee of a commodity pool where the trustee had no authority to perform CPO functions, and a separate registered CPO was authorized to perform such functions. The Division further granted exemptive relief from certain of the Part 4 regulations to the registered CPO of a commodity pool, whose shares the CPO intended to publicly offer and to list for trading on a national securities exchange. As is discussed in the letter, this relief was in the nature of substituted compliance with those regulations. Finally, the Division granted exemptive relief from certain of the Part 4 regulations to the registered CTA of a commodity pool where the CTA was an affiliate of the pool’s CPO.

The CPO requested relief from the requirement of Regulation 4.7(b) that the Pool file a certified Annual Report within 90 days of the end of the fiscal year on June 30, 2009. The CPO requested permission to file a single, certified Annual Report for the Pool for the 13-month period from July 1, 2008 through July 24, 2009, upon which date the Pool ceased trading and distributed funds to participants. Pursuant to the authority delegated by Regulations 140.93 and 4.12(a), the Division granted relief from the Annual Report requirement of Regulation 4.7(b) for the Pool’s fiscal year ending June 30, 2009.

The Division of Market Oversight issued a letter amending the no-action relief granted November 12, 1999, permitting the International Petroleum Exchange of London Limited (now ICE Futures Europe) to make its electronic trading and order matching system available to its members in the US without obtaining contract market designation pursuant to Sections 5 and 5a of the CEA. The amendment adds additional conditions to ICE Futures Europe’s no-action relief for contracts that it lists that settle against any price of (1) a contract listed for trading on a DCM or DTEF, or (2) a contract listed for trading on an exempt commercial market that has been determined to be a significant price discovery contract. The additional conditions are that ICE Futures Europe provide CFTC staff trade execution and audit trail data for all linked contracts, copies of, or hyperlinks to, all rules, rule amendments, circulars and other notices published by the exchange, and copies of all Disciplinary Notices involving the linked contracts; provide for CFTC on-site visits to examine ICE Futures Europe’s ongoing compliance with its no-action relief; and in the event that the CFTC, directs that NYMEX take emergency action with respect to a linked contract (e.g., to cease trading in the contract), ICE Futures Europe, subject to information-sharing arrangements between the CFTC and FSA, will promptly take similar action with respect to the linked contract at ICE Futures Europe.

The Division of Clearing and Intermediary Oversight issued an interpretation that a charitable foundation would not be a commodity pool, and that its directors would not be commodity pool operators, if the foundation traded commodity interests. This interpretation was based on, among others, representations that: (1) no current or future donor to the foundation will be entitled to receive any of the assets, net earnings, income or profits of the foundation; and (2) no (other) charitable organization has any entitlement, on an annual or other basis, to a contribution from the foundation.

The CPO of a commodity pool with the majority of its assets embroiled in a bankruptcy requested relief from the ongoing reporting requirements under Part 4. The CPO filed an Annual Report for the Pool for the 2008 fiscal year, which contained information regarding the bankruptcy. DCIO granted relief pursuant to Regulations 140.93 and 4.12(a), but conditioned such relief on the following representations being made to the Commission and participants: the Pool has ceased trading; the pertinent facts regarding the bankruptcy and the frozen assets, including, but not limited to, the value of the assets, the percentage of the Pool’s NAV that the frozen assets represent, and the date upon which the bankruptcy petition was filed; the pertinent facts regarding the value of any assets presently being held by the Pool that have not been distributed to participants and the reasons for their retention; a representation that no additional fees will be deducted from the assets held by the Pool; the pertinent facts regarding the disposition of any income generated by the assets held by the Pool, if any; a representation regarding whether any assets have been distributed to participants; a representation regarding how payouts from the bankruptcy estate will be distributed to participants; i.e., whether distributions will be made as funds are received from the bankruptcy estate or whether payouts will be retained by the Pool until the final payout is received from the estate; a representation regarding any write down of the value of the claim against the bankruptcy estate; a representation regarding the distribution of assets on a pro rata basis to participants; and a representation that the financial information contained in the Pool’s liquidation report remains accurate. Additionally, DCIO required that the CPO make a final disclosure to the Commission and participants upon the final disbursement of the Pool’s assets.