CFTC Staff Letter 94-21: No-Action Relief from CPO and CTA Registration for Hedging Activities

DIVISION OF
TRADING AND MARKETS
COMMODITY FUTURES TRADING COMMISSION
2033 K Street, NW, Washington, DC 20581
(202) 254-8955
(202) 254-8010 Facsimile
January 24, 1994
Re: Request for Relief from Registration as a CPO and CTA Dear This is in response to your letter dated November 25, 1992, as supplemented by letters dated January 4, 1993 and May 17, 1993 and telephone conversations with Division staff, in which you request in connection with the operation of the ("Partnership"), that the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission") grant relief to the Partnership's general partner from registration as a commodity pool operator ("CPO") and a commodity trading advisor ( "CTA") . Based upon the representations made in your letter, as supplemented, we understand the relevant facts to be as follows. The Partnership was formed as a private investment limited partnership and commenced operations in June of 1988. It was formed "to seek investments in the financial services, housing and real estate industries and to make and dispose of such investments."Y The Partnership wishes to hedge its investments thro'ugh the use of financial futures contracts or options there￾on. In this regard, you represent that the Partnership will engage' in commodity-interest trading solely for hedging purposes within the meaning and intent of Rule 1.3(z)Y and that it will use no more than five percent of the Partnership's total assets for initial margin deposits and premiums for its commodity￾interest positions. Y The assets of the Partnership currently include a savings and loan association, commercial and multi-family residential real estate, real estate service companies, a commercial loan portfolio purchased from the Resolution Trust Corporation, a servicer of commercial loans and a portfolio of credit card intangibles. 1 Unless otherwise noted, Commission rules referred to herein are found at 17 C.F.R. Ch. I (1993).