CFTC Staff Letter 94-71: No-Action Relief from CPO Registration for General Partner of Affiliated Pools

.JIVISION OF
TRADING AND MARKETS
Dear
COMMODITY FUTURES TRADING COMMISSION 2033 K Street, NW, Washington, DC 20581 (202) 254 -8955 (202) 254-8010 Facsimile April 28, 1994 Re: Relief from Regulation as a CPO fjcj_~'i , I I This is in response to your letter dated March 8, 1994 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by the Disclosure Document dated March 29, 1994 enclosed therewith, your letters dated March 16, March 21 and March 23, 1994 and telephone conversations with Division staff, where you requested on behalf of "X" relief from regulation as a commodity pool operator ("CPO") in connection with its operation of (the "U.S. Operating Partnership") and (the "Cayman Operating Partnership") (collec￾tively, the "Operating Partnerships"). Based upon the representations made in your letter, as supplemented, we understand the relevant facts1 to be as follows. 11 Y11 is the general partner and registered CP01_ of 11 X11 , a lim￾ited partnership organized under Delaware law in July 1991 to trade securities and, to a lesser extent and incidental thereto, commodity interests based on United States and Euro~~an govern￾ment securities, financial indices, oil and metals.-/ In this regard, by letter dated November 5, 1991, "Y 11 claimed the relief available under Rule 4.12(b) in connection with its operation of 11 X11 • "X 11 currently has forty-nine limited partners, each of whom is an 11 accredited investor" under Regulation D of the Securities Act of 1933, except for six employees of "X" "who received their relatively small participations under "X"'s non-contributory deferred compensation plan." Prior to January 6, 1994, "X" operated in such a way that it was registered as an introducing broker ("IB 11 ) with the Commis￾sion and registered as a broker-dealer with the Securities and 1./ The managing general partner of "Y 11 is· 11 A", of which the general partner is "B", the sole shareholder of which is 11 C11 • 2./ As of December 311 1993, initial margin and premiums paid for commodity interests represented less than 0.5% of the fair market value of "X 11 's assets.