Release: # 4374 -00

For Release: March 7, 2000


New Rule Eliminates Registration Requirement For Commodity Trading Advisors That Distribute Standardized Commodity Trading Advice Through Periodicals, The Internet, and Similar Media

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it has adopted a rule that exempts from mandatory registration under the Commodity Exchange Act (CEA) commodity trading advisors whose business is limited to distributing standardized commodity trading advice. Such commodity trading advice is typically disseminated through media such as periodicals, books, Internet web sites, electronic mail, telephone voice recordings, facsimile services, and non-customized computer software.

Previously, persons advising others about commodity futures and options contracts were required to register with the Commission as commodity trading advisors (CTAs). Under the new rule, only CTAs that manage their clients' trading or that provide advice based on or tailored to their clients' circumstances are required to register. Although CTAs that provide standardized advice are relieved of the burdens associated with registration, they continue to be subject to other provisions of the CEA and Commission rules that apply to CTAs, including prohibitions against fraud and deceptive advertising, prohibition against the handling of clients' funds by a CTA, and prescribed disclosures concerning the limitations of hypothetical or simulated commodity trading.

The exemption is consistent with the purpose of the CEA to achieve a regulatory scheme that is consistent with the public interest. The exemption is designed to eliminate the legal uncertainty that has arisen from recent federal court decisions involving plaintiffs who published standardized commodity trading advice through impersonal media. In these cases, the plaintiffs claimed that the First Amendment protected their right to publish without registration because they did not possess discretionary control over their clients' commodity trading accounts; they did not provide advice tailored to their clients' particular situations; and they had no personal contact with their clients. The rule, which adds a new subdivision (9) to 17 C.F.R. 4.14(a), reflects these considerations.

To qualify for the registration exemption, the CTA may not engage in (i) directing client accounts or (ii) providing commodity trading advice that is based on, or tailored to, a particular client's circumstances.

The final rule will be published shortly in the Federal Registerand will become effective upon publication. A copy of the Commission's Notice of Final Rulemaking can be obtained by contacting the Commission's Office of Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100. The Commission also intends to make its Notice of Final Rulemaking available in the near future on its website at