CFTC Issues Relief to Certain Delegating CPOs from Registration Requirements | Practical Law

CFTC Issues Relief to Certain Delegating CPOs from Registration Requirements | Practical Law

The CFTC released four no-action letters, clarifying the conditions to relief from registration requirements for delegating CPOs.

CFTC Issues Relief to Certain Delegating CPOs from Registration Requirements

Practical Law Legal Update w-006-3873 (Approx. 3 pages)

CFTC Issues Relief to Certain Delegating CPOs from Registration Requirements

by Practical Law Finance
Published on 15 Feb 2017 • USA (National/Federal)
The CFTC released four no-action letters, clarifying the conditions to relief from registration requirements for delegating CPOs.
On February 1, 2017, the CFTC released four no-action letters providing relief from the requirement to register as a CPO under CEA section 4m(l) to CPOs that have delegated certain of their responsibilities as the CPO of a commodity pool (delegating CPOs) to a designated CPO that is a CFTC-registered CPO (designated CPO).
These no-action letters follow from CFTC No-Action Letter 14-126, which, along with No-Action Letter 14-69, streamlined the approach to relief from CPO registration requirements for designating CPOs (see Legal Update, CFTC Clarifies Relief for "Delegating CPOs" from Registration Requirements).
In No-Action Letter 14-126, the CFTC acknowledged that there may be certain CPO delegation situations that warrant no-action relief from registration requirements that were not mentioned in No-Action Letter 14-126. To address those issues, the CFTC would continue to evaluate requests submitted under CFTC Regulation 140.99 for situations outside of the scope of No-Action Letter 14-126. The four no-action letters listed below are the result of the CFTC evaluating situations outside of the scope of No-Action Letter 14-126. In each case, both the designating and designated CPOs make certain common representations regarding their structure and operations to demonstrate that they are otherwise in compliance.
  • No-Action Letter 17-07, in which the delegating CPO is a trustee of the pool and is a wholly owned subsidiary incorporated in the Cayman Islands and operating in Luxembourg, and the delegated CPO serves as a wholly owned subsidiary of a publicly traded company with its operations based in the US and all of its books and records kept in the US.
  • No-Action Letter 17-08, in which the delegating CPO is incorporated and operates in the Cayman Islands, is a trustee of the pool, and also serves as its administrator, custodian, and registrar and transfer agent. The delegated CPO serves as the investment manager to the pool and has been registered as a commodity trading advisor with its operations based in the US and all of its books and records kept in the US.
  • No-Action Letter 17-09, in which the delegating CPO is incorporated and operates in the Cayman Islands and is a trustee of the pool. The delegated CPO is a wholly-owned subsidiary of a publicly traded company, serves as the investment manager to the pool, and has been registered as a commodity trading advisor (CTA) with its operations based in the US and all of its books and records kept in the US.
  • No-Action Letter 17-10, in which the delegating CPO is incorporated and operates in the Cayman Islands and is a trustee of the pools. The delegated CPO is a wholly owned subsidiary of a publicly traded company, serves as the investment manager to each of the pools, and has been registered as a CTA with its operations based in the US and all of its books and records kept in the US.