CFTC Staff Letter 91-05: No-Action Relief for Employee Welfare Benefit Plan CPO Registration

DIVISION OF
TRADING AND MARKETS
Re:
Dear

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  ' COM~fODITY FUTURES TRADING cor~MISSION 2033 K STREET, N.W., WASHINGTON, D.O. 20581 (202) 254-8955 (202) 254-3534 FACSIMILE May 2 8, 19 91 This is in response to your letter dated November 7, 1990 to the Division of Trading and Markets (the "Division"), in which you requested on behalf of the Board of Trustees (the "Board") of the (the "Fund") relief from regulation as a commodity pool operator ("CPO"). Based upon your letter and subsequent telephone conversations with Division staff, we understand the facts to be as follows. The Fund is a multiemployer, welfare benefit plan administered by the Board which is comprised of officials of and various local unions. The Fund provides health care and other benefits to employees on behalf of whom employers make contributions pursuant to collective bargaining agreements with the . The Board, on behalf of the Fund, desires to invest assets of the Fund in the trading of commodity interests solely for bona fide hedging purposes within the meaning and intent of Rule 1.3(z) (1). 1/ At no time will the Board enter into futures and options contracts for which the aggregate initial margin will exceed five percent (5%) of the fair market value of the Fund's assets, after taking into account unrealized profits and unrealized losses on any such contracts it has entered into. The Fund is a noncontributory plan. All contributions to the Fund are made by the employers whose employees receive benefits under the Fund. No payments into the Fund are solicited from or permitted by such employees. The Board has not offered nor does it propose to offer participation in the Fund to the public as or in a. commodity pool or otherwise as or in a vehicle for trading in the commodity futures and commodity options markets. 1/ commission rules referred to herein are found at 17 c.F.R Ch • I ( 19 9 0 ) •