CFTC Staff Letter 94-81: No-Action Relief for CTA Registration

DIVISION OF
TRADING AND MARKETS
Dear
COMMODITY FUTURES TRADING COMMISSION 2033 K Street, NW, Washington, DC 20581 (202) 254- 8955 (202) 254- 8010 Facsimile June 9, 1994 Re: Request for Interpretative Letter 1a(S) and 4m(1) ~- This is in response to your letter dated September 30, 1993, as supplemented by telephone conversations with staff of the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), which we have treated as a request that the Division provide relief to "T" if, under the circumstances set forth below, 11 T11 does not reqister with the Commission as a commodity trading advisor ( 11 CTA11 ) .I/ Based upon the representations made in your letter, as supplemented, we understand the relevant facts to be as follows. "T", a wholly-owned subsidiary of 11 U11 , provides investment advice to and manages the investments of certain pension plans and other assets of "U", its wholly-owned subsidiaries and affiliates (including subsidiaries of subsidiaries) (the 11 U11 Entities"). In this regard, 11 T11 is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. Incidental to its investment function, 11 T11 also provides commodity interest trading advice to the 11 U11 Entities. Specifically, 11 T11 currently provides or is authorized to provide commodity interest trading advice to the following 11 U11 Entities: (1) nine trust accounts, comprised solely of pension plan assets from two 11 U11 pension plans and two pension plans of the 11 S 11 Corporation, a wholly-owned subsidiary of 11 U11 ; (2) two 1/ Your letter sets forth two potential bases for relief: (a) that "T" is not required to register as a CTA because: (1) it does not hold itself out to the public as a CTA; and (2) it will provide commodity interest trading advice to not more than 15 persons, i.e., the entities for which it will provide commodity interest trading advice should be viewed as one person due to their corporate relationship; or (b) that 11 T11 is not a CTA within the meaning and intent of Section 1a(5) of the Commodity Exchange Act, as amended ("Act"). Given our resolution of your request, it has not been necessary for us to separately consider either of . these issues.