CFTC Staff Letter 03-18: No-Action Positions for CPO and CTA Registration Regarding Non-U.S. Managed Accounts

CFTC Letter 03-18
CFTC letter No. 03-18
April 4, 2003
No-Action
Division of Clearing and Intermediary Oversight Re: Section 4m(1) – Request for CPO and CTA registration no-action positions Rule 4.14(a) (8) – Request for confirmation of eligibility Dear :
This is in response to your letter dated August 13, 2002, to the Division of Clearing and Intermediary Oversight (the “Division”) [1] of the Commodity Futures Trading Commission (the “Commission”), as supplemented by the e-mail messages dated October 4, December 9, December 11, 2002, and January 10, January 22, January 30 and February 7, 2003 and facsimile transmission dated January 14, 2003 from “A” of your firm, and by telephone conversations with Division staff. By your correspondence, you request relief on behalf of “R”, “S”, “T”, and the U.S. persons[2] (collectively, the “U.S. Directors”) who are directors of “U”, a ___________ investment company (the “U”) [3] or directors of certain “V” investment companies (the “V Funds”), in connection with advising and operating the “U”, the “V” Funds and certain European pension plans (the “Pension Plans,” [4] collectively referred to herein with the “U” and the “V” Funds as the “Managed Accounts”).[5] Specifically, you request that the Division: (1) will not recommend that the Commission commence any enforcement action against “R” for failure to register as a commodity pool operator (“CPO”) or as a commodity trading advisor (“CTA”) under Section 4m(1)[6] of the Commodity Exchange Act (the “Act”); (2) will not recommend that the Commission commence any enforcement action against either “S” or “T” for failure to register as a CTA under Section 4m(1) of the Act; (3) will not recommend that the Commission commence any enforcement action against any of the U.S. Directors for failure to register as a CPO under Section 4m(1) of the Act; and (4) confirm that any relief granted by the Division not preclude “R” from claiming, or “T” or “S” from continuing to claim, the CTA registration exemption provided by Rule 4.14(a)(8). Based upon the representations made in your correspondence, we understand the facts to be as follows. “R” is a United Kingdom investment adviser that has applied for registration with the Securities and Exchange Commission (“SEC”) as an investment adviser. “T” and “S” are each registered with the SEC as investment advisers, each has a principal place of business in the United States, and each has claimed exemption from CTA registration under Rule 4.14(a)(8).[7] “R” has entered into subadvisory agreements with “T” and “S” to provide investment advisory, marketing and client servicing functions to the Managed Accounts.[8] Through this structure, “R”, “T” and “S” currently provide securities advice to the “U” and several “V” Funds and Pension Plans. In the future, “T” and “S” wish to provide file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/03letters/tm03-18.htm (1 of 5) [5/6/2010 5:38:13 PM]