CFTC Staff Letter 15-11: Exemption from Regulation 4.7(b)(3) Annual Report Requirement for CPO of Commodity Pool

Division of Swap Dealer and Thomas J. Smith
Intermediary Oversight Acting 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 tsmith@cftc.gov
CFTC Letter No. 15-11
Exemption
February 3, 2015
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 January 26, 2015, 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 an Annual Report for the Pool for the period from January 1, 2014, through January 9, 2015, 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, 2014, and instead, are seeking permission to distribute an Annual Report to the Pool’s participant with respect to the period beginning on January 1, 2014, and ending on January 9, 2015. In support of your request, you state that the Pool terminated trading on December 31, 2014, and that the final asset was closed out on January 9, 2015. At that time, the Pool had one participant, an affiliate of the CPO, and a net asset value of $. As of the date of your request, you state that % of the Pool’s net assets have been distributed, and the balance will be paid to the participant immediately following completion of the audit. In support of your request for relief, you have also submitted a signed waiver from the participant, consenting to receive an Annual Report for the period beginning on January 1, 2014, and ending on January 9, 2015. 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

RE: “A”
2 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 granting the request of the CPO to file an Annual Report for the Pool for the period from January 1, 2014 to January 9, 2015 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 from January 1, 2014 to January 9, 2015. 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 participant and the filing with NFA of an Annual Report containing combined financial information for the period beginning January 1, 2014 and ending January 9, 2015, 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. 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, Thomas J. Smith Acting Director Division of Swap Dealer and Intermediary Oversight