CFTC No-Action Relief for Newsletter Author Not Registering as Introducing Broker

CFTC Letter No. 01-67
CFTC Letter No. 01-67
June 21, 2001
No Action
Division of Trading and Markets
Re: Section 4d(a)(1) – No-Action Relief in Connection with Registration as an Introducing Broker Dear :
This is in response to your letter, received by the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), on April 26, 2001. By your correspondence, you request that “A” not be required to register as an introducing broker ("IB") under the Commodity Exchange Act ("Act").[1] Based upon your representations, we understand the relevant facts to be as follows. “X” is a registered IB. As part of its IB business, “X” has a website that is maintained by “A”. “A” also writes a "trade recommendation newsletter" for persons who pay an annual subscription. This newsletter, called “Y”, is advertised on the “X” website. “A” provides “X” "with the names of anyone who signs up for his free sample trial." You represented that “X” does not compensate “A” for providing this list and does not initiate contact with any person on the provided list. “A's” Newsletter Activity The Act defines a commodity trading advisor ("CTA") as a person who, for compensation or profit, (1) advises others as to the value of, or the advisability of trading in, futures or commodity options, or (2) as
part of a regular business, issues analyses or reports concerning the foregoing. These activities may be
conducted either directly or indirectly, through publications, writings, or electronic media.[2] Accordingly, based upon your description, it appears that “A's” activities would bring him within the definition of a CTA. Generally, a person conducting business as a CTA must register with the Commission. However, Commission Rule 4.14(a)(9) exempts from mandatory registration under the Act CTAs whose business is limited to distributing standardized commodity trading advice.[3] Rule 4.14(a) (9) is meant to exempt from registration CTAs who do not provide trading advice based on, or tailored to, the commodity interest or cash market positions or other circumstances or characteristics of particular clients. Based upon the limited facts presented in your letter, it appears that Rule 4.14(a)(9) might be applicable to “A's” activities in regard to his newsletter and, accordingly, he might be exempt from registering as a CTA. Please be aware that, in order to qualify for the exemption under Rule 4.14(a)(9), “A” may not tailor any opinion he gives, as to what commodities to buy or sell, to a subscriber's particular circumstances. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/01letters/tm01-67.htm (1 of 5) [5/6/2010 6:16:03 PM]