CFTC No-Action Letter 99-56: Exemption from CTA Registration for Investment Adviser Providing Incidental Commodity Advice to Foreign Sub-Funds

99-56
CFTC Letter No. 99-56
December 6, 1999
No-Action
Division of Trading & Markets
Re: Section 4m(1) - - Request for CTA Registration No-Action Position Dear :
This letter is in response to your letter dated May 3, 1999 to the Division of Trading and Markets ( Division ) of the Commodity Futures Trading Commission ( Commission ), as supplemented by your letter dated July 22, 1999. By your correspondence, you request relief from registration as a commodity trading advisor ( CTA ) under Section 4m(1) of the Commodity Exchange Act ( CEA ) 1 for X in connection with its providing investment advisory services to The Sub-Funds).2 Based upon the representations made in your letter, we understand the facts to be as follows. X is a Colorado Corporation registered as an investment adviser under the Investment Advisers Act of 1940, as amended ( Advisers Act ). X will provide commodity interest trading advice to the Sub-Funds solely incidental to its business of providing securities advice to them, and X will employ only such strategies as are consistent with eligibility status under Commission Rule 4.5.3 Further, X will not hold itself out as a CTA.4 The Sub-Funds are sub-funds of Y , a Societé d Investissment a Capital Variable under the laws of Luxembourg.5 The Sub-Funds invest primarily in securities, and they will not permit investment by United States persons, as that term is defined in Rule 4.7. Further, the Sub-Funds will be operated consistent with the requirements of Rule 4.5(c)(2). Commission Rule 4.14(a)(8) exempts from registration CTAs who, among other things, advise only entities that are excluded from the CPO definition under Rule 4.5. Commission Rule 4.5 excludes from the CPO definition entities that, among other things, are investment companies registered under the Investment Company Act of 1940 (the ‘40 Act ). Because the Sub-Funds are organized in a foreign jurisdiction, they cannot, absent an exemption from the Securities and Exchange Commission, register under the 40 Act. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/99letters/tm99-56.htm (1 of 3) [5/6/2010 7:14:22 PM]