CFTC Staff Letter 10-36: Registered Introducing Broker Not Required to Register as Commodity Trading Advisor for Automated Forex Service

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. 10-36 Interpretation October 25, 2010 Division of Clearing and Intermediary Oversight Re: Sections 2(c)(2)(B)(iv)(I)(bb) & 2(c)(2)(C)(iii)(I)(bb) of the Act – Request for Interpretation that Certain Activities Will Not Require a Registered IB to Also Register as a CTA Dear :
This is in response to your letter dated June 16, 2010, to the Division of Clearing and Intermediary Oversight (“Division”) of the Commodity Futures Trading Commission (“Commission” or “CFTC”), as supplemented by your email sent August 25, 2010 (collectively, “correspondence”) on behalf of “A”. By your letter, you request that the Division confirm your interpretation that the “Service” to be offered by “A” will not require “A” to register as a commodity trading advisor (“CTA”) under Section 2(c)(2)(B)(iv)(I)(bb) or 2(c)(2)(C)(iii)(I)(bb) of the Commodity Exchange Act (“Act”).1 Based upon the representations made in the correspondence, we understand the facts to be as follows: “A” is a registered introducing broker (“IB”). It intends to offer its customers a forex trading service known as the “Service”. Through the Service, customers will pay a fee to create an account that will automatically follow the trading conduct of one or more “Bs”. The “Bs” are forex traders contracted and compensated by “A” to have their trading signals replicated for the purposes of the Service. “A” will provide risk and performance information to all participating customers, and each customer will choose the “B(s)” for the automated program and control all other financial aspects of his/her account with the ability to change any trading controls at any time. “A” will not assist any customer in designing the trading program offered by the Service, but will provide technical support and assistance. Based solely upon your representations, and without conducting an on-site inspection of “A” or the operation of the Service, the Division does not believe that the Service involves any