CFTC Staff Letter 14-152: No-Action Relief for Operators of Insurance-Linked Securities Issuers

Operators of insurance-linked securities (ILS) issuers are exempt from registration as commodity pool operators (CPO) if they satisfy specific conditions mirroring Regulation 4.13(a)(3). Eligible entities must ensure ILS interests are exempt from Securities Act registration, offered only to qualified institutional buyers and qualified purchasers, and not marketed as vehicles for trading commodity interests. The ILS issuer must limit collateral investments to cash or highly liquid assets, restrict commodity interest positions to swaps necessary for the ILS transaction, and maintain strict operational separateness from the protection buyer.

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Division of Swap Dealer and Gary Barnett
Intermediary Oversight Director
U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-6700
Facsimile: (202) 418-5528 gbarnett@cftc.gov
CFTC Letter No. 14-152
No-Action
December 18, 2014
Division of Swap Dealer and Intermediary Oversight Securities Industry and Financial Markets Association 120 Broadway, 35th Floor New York, NY 10271 RE: Request for Interpretative or No-Action Relief from Commodity Pool Operator Registration for Operators of Insurance-Linked Securities Issuers Ladies and Gentlemen:
This is in response to your letter (“Correspondence”), dated August 18, 2014, to the Division of Swap Dealer and Intermediary Oversight (“Division”) of the Commodity Futures Trading Commission (“Commission”), as well as ongoing discussions with Division staff, in which you requested interpretative or no-action relief from commodity pool operator (“CPO”) registration for entities engaging in insurance-linked securities (“ILS”) transactions. 1

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Source: Commodity Futures Trading Commission — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works