CFTC Staff Letter 10-33: No-Action Relief from CPO Registration for General Partner of a Commodity Pool

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5430
Facsimile: (202) 418-5547 aradhakrishnan@cftc.gov Division of Clearing and Intermediary Oversight Ananda Radhakrishnan Director

CFTC Letter No. 10-33
No-Action
September 21, 2010
Division of Clearing and Intermediary Oversight Re: Section 4m(1); Request for CPO Registration No-Action Position for General Partner of a Commodity Pool Dear :
This is in response to your letter dated July 19, 2010 to the Division of Clearing and Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (the “Commission”), as supplemented by a telephone conversation with you on August 4, 2010 and email messages from your colleague, “A”, on August 4, 2010 and August 18, 2010 (collectively, the “correspondence”). By the correspondence, you seek relief on behalf of “B” from the requirement to register with the Commission as a commodity pool operator (“CPO”) under
Section 4m(1) of the Commodity Exchange Act (the “Act”)1
in connection with “B” serving as the general partner of the Master Fund, such that “C”, a registered CPO, may serve as the Master Fund’s CPO instead. Based upon representations made in the correspondence, we understand the relevant facts to be as follows. The Master Fund is organized as a Cayman Islands exempted limited partnership. While “B” is the general partner, “B” has delegated all of its management authority with respect to the Master Fund to “C”, the Master Fund’s investment manager and a registered CPO. As explained in your letter, the structure is intended to provide more favorable tax treatment by replacing the incentive fee paid to “C” at the Fund level with an equal incentive allocation to be allocated to “B” at the Master Fund level.2