CFTC Staff Letter 01-03: Exemption from Reporting Requirements for CPO X

01-03
CFTC Letter No. 01-03
January 16, 2001
Exemption
Division of Trading & Markets
Re: Request for Exemption from Rules 4.7(b)(2) and 4.7(B)(3) Dear :
This is in response to your letter dated December 7, 2000, to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by telephone conversations with the Commission staff, in which you request that "X", a registered commodity pool operator ("CPO") and the CPO of the "Master Fund", be granted an exemption from the periodic and annual reporting requirements of Rule 4.22, as modified by Rules 4.7(b)(2) and 4.7(b)(3).1 Based upon your representations, we understand the facts to be as follows. "X" operates the Master Fund, which has as its sole participants two feeder funds, "Feeder Fund I" and "Feeder Fund II". "X" serves as the CPO of Feeder Fund I and the registered CPO of Feeder Fund II is "Y". "A", "B", and "C" are the Managing Members of both "X" and "Y". "X" and "Y" have previously claimed relief under Rule
4.7 with respect to the Master Fund and each of the Feeder Funds.2
Rules 4.7(b)(2) and 4.7(b)(3) require that a CPO of a pool operated under Rule 4.7 comply with certain periodic and annual reporting requirements, as set forth in the Rule. Therefore, absent the requested exemption, "X" as the CPO of the Master Fund would: (i) be required to provide periodic reports and an annual report to itself as the CPO of Feeder Fund I; and (ii) with respect to Feeder Fund II, would effectively also be required to provide periodic reports and an annual report to itself since the same three individuals are the Managing Members of both "X" and "Y", the CPO of Feeder Fund II. Based upon the representations contained in your letter, the Division believes that granting the requested exemption would not be contrary to the public interest and the purposes of Rules 4.7(b)(2), 4.7(b)(3), and 4.22.3 Accordingly, by the authority delegated to it under Rule 140.93(a)(1), the Division hereby exempts "X" from the periodic and annual reporting requirements of Rules 4.7(b)(2), 4.7(b)(3), and 4.22, in connection with its operation of the Master Fund. This relief is subject to the conditions that: (i) "X" remains the CPO of the Master Fund and Feeder Fund I, "Y" remains the CPO of Feeder Fund II, and "A", "B", and "C" remain the Managing Members of "X" and "Y"; (ii) "X" limits participation in the Master Fund to Feeder Fund I and Feeder Fund II; and (iii) the annual reports of Feeder Fund I and Feeder Fund II contain financial statements that include, among other information, the fees associated file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/01letters/tm01-03.htm (1 of 3) [5/6/2010 6:12:45 PM]