CFTC Staff Letter 01-41: No-Action Position for CPO Registration of Grain Farmer Marketing Club

CFTC Letter No. 01-41
CFTC Letter No. 01-41
April 23, 2001
No-Action
Division of Trading and Markets
Re: Section 4m(1); “A”; Request for CPO Registration No-Action Position to Permit Registered IB to Operate or Affiliate with a Marketing Club Established to Assist Local Farmers in Learning How to Hedge Crop Price Risks Dear:
This is in response to your electronic mail message dated August 4, 2000 to the Commodity Futures Trading Commission (“Commission”), as supplemented by electronic mail messages dated August 18, 2000, August 29, 2000, August 31, 2000, September 18, 2000, September 19, 2000, September 21, 2000 and October 23, 2000; facsimile transmissions dated September 20, 2000 and September 28, 2000; and telephone conversations with staff of the Division of Trading and Markets (“Division”). By your correspondence, you request, on behalf of “A”, a registered introducing broker ("IB") and commodity trading advisor ("CTA"), that the Division not recommend that the Commission commence any enforcement action against “A” for failure to register as a commodity pool operator (“CPO”) under
Section 4m(1) of the Commodity Exchange Act (“Act”),[1] if “A” operates a marketing club in North
Dakota (“Z”, or the “Club”) that trades commodity interests.[2] You are the compliance manager for “Y”, the futures commission merchant that will be carrying the commodity interest trading account of the Club. The Formation of the Club Based upon your and “A’s” representations, we understand the facts to be as follows. “A” is a farmer who resides in North Dakota. In or about February, 1999, “A” sponsored a meeting for local farmers and agricultural-related businesses to determine if there was any interest in forming a marketing club that would provide club members with the opportunity to learn about the different tools available to them for managing the risks associated with marketing their grain. “A” and 27 other local farmers who expressed an interest in participating in such a club thereafter formed the Club. It is a general partnership in which each farmer shares equal responsibility for operating the Club. There are currently 28 partners, and the Club will have no more than 30 partners. An agricultural extension agent helps with education and discusses management questions related to agricultural production. North Dakota State University Cooperative Extension Service Grant Program file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/01letters/tm01-41.htm (1 of 5) [5/6/2010 6:14:33 PM]