CFTC Staff Letter 14-22: Exemption from Regulation 4.7(b)(3) Annual Report Requirement for Commodity Pool

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. 14-22
Exemption
February 24, 2014
Division of Swap Dealer and Intermediary Oversight RE: “A”, a registered commodity pool operator for the “B” Dear :
This letter is in response to your letter dated February 18, 2014, to the Division of Swap Dealer and Intermediary Oversight (“Division”) of the Commodity Futures Trading Commission (“Commission”). You request on behalf of “A”, the commodity pool operator (“CPO”) for the “B” (the “Pool”), exemptive relief from Commission Regulation 4.7(b)(3), which requires that the CPO distribute to its participants, and file with the National Futures Association (“NFA”), an Annual Report within 90 days of the close of the Pool’s fiscal year. Instead, you propose to file a 13-month Annual Report for the Pool for the period from January 1, 2013, through January 31, 2014, the date the Pool permanently ceased trading. The Pool had been operated pursuant to an exemption under Commission Regulation 4.7. Based upon the representations made in your letter, we understand the relevant facts to be as follows. You are requesting an exemption from the requirement of filing an Annual Report for the Pool’s fiscal year ending December 31, 2013, and instead, are seeking permission to distribute an Annual Report to the Pool’s participants with respect to the period beginning on January 1, 2013, and ending on January 31, 2014. In support of your request, you state that the CPO determined on January 23, 2014 to wind up the Pool’s operations. On January 31, 2014, the Pool permanently ceased trading. At that time, the Pool had 15 participants and a net asset value of €. On February 13, 2014, the CPO fully completed the process and made a final distribution of € to the remaining participants. Commission Regulation 4.7(b)(3) requires each registered CPO to file an Annual Report with NFA and distribute copies to the pool participants within 90 calendar days of the end of the pool’s fiscal year or the permanent cessation of trading. The principal purpose of financial reporting required by Commission Regulation 4.7 is to ensure that pool participants receive accurate, fair and timely information on the overall trading performance and financial condition of the pool. Based upon the representations made in your letter, the Division believes that

RE: “A”
2 granting the request of the CPO to file an Annual Report for the Pool for the 13-month period from January 1, 2013 to January 31, 2014 is neither contrary to the purposes of Commission Regulation 4.7 nor to the public interest. Accordingly, pursuant to the authority delegated by Commission Regulations 140.93 and 4.12(a), the Division will grant the CPO’s request for relief from the Annual Report requirement of Regulation 4.7(b)(3), thereby permitting it to file an Annual Report for the Pool for the 13-month period from January 1, 2013 to January 31, 2014. This relief is based upon the representations that you have made to the Division. Any different or omitted facts may result in a different determination and may render any relief set forth in this letter void. Therefore, you must notify the Division immediately in the event that the operations or activities of the CPO or the Pool changes in any material way from those represented to the Division. Further, the relief granted in this letter is conditioned on the distribution to the Pool’s participants and the filing with NFA of an Annual Report containing combined financial information for the period beginning January 1, 2013 and ending January 31, 2014, in full compliance with Commission Regulation 4.7(b)(3). This relief shall not excuse the CPO from compliance with any other applicable requirements contained in the Commodity Exchange Act or in the Commission’s regulations issued thereunder, including, but not limited to, Part 4 of the Commission’s regulations. Moreover, this letter represents the views of the Division, and does not necessarily represent the views of the Commission or any other division or office of the Commission. If you have any questions regarding this letter, please contact Amanda Olear, Associate Director, at 202-418-5283 or aolear@cftc.gov, or Elizabeth Groover, Special Counsel, at 202- 418-5985 or egroover@cftc.gov. Very truly yours, Gary Barnett Director Division of Swap Dealer and Intermediary Oversight