CFTC Staff Letter 94-86: No-Action Relief for CTAs Advising Foreign Investment Companies

DIVISION OF
TRADING AND MARKETS
Re:
Dear r:rC:fJ!y[MOPJ!'X::t!:,UTURES TRADING COMMISSION (;·.,' i : , · '203S :KJ'Stf.eet, NW, Washington, DC 20581 . ;·. (202) 254-8955 (202) 254-8010 Facsimile September 9, 1994 Rules 4.31 and 4.32i Rule CTA/Investment Adviser Providing Foreign Investment Companies
3.12 Registered
Commodity Advice to
This is in response to your letter dated July 19, 1994, as supplemented by telephone conversations with staff of the Division of Trading and Markets (the "Division") of the Commodity Futures Trading Commission (the "Commission"), in which you request, on behalf of "X", that the Division not recommend that the Commission take any enforcement action against "X" if it provides commodity interest trading advice to certain foreign investment companies (as defined below) and (1) fails to comply with the disclosure and recordkeeping requirements of Commission Rules 4.31 and 4.32i.l/ and (2) permits persons to become associated with "X" without such persons being registered as associated persons ( "APs 11 ) of "Xn. Based upon the representations made in your letter, as supplemented, we understand the relevant facts to be as follows. "X" is registered with the Commission as a commodity trading advisor ( "CTA") and is also registered with the Securities and Exchange Commission ("SEC") as an investment adviser under the Investment Advisers Act of 1940. Subsequent to "X's" registration as a CTA, the Commission proposed and adopted Rule 4.14 (a) (8) which, among other things, exempts a registered investment adviser from registering as aCTA, provided certain conditions are met. As a registered investment adviser, ''X" desired to avail itself of the relief provided by Rule 4.14 (a) (8) without abandoning its CTA registration. Accordingly, "X" sought, and by letter dated October 19, 1987 the Division granted, relief from the disclosure and recordkeeping requirements of Rules 4.31 and 4.32 (the "1987 Relief") . 1/ Commission rules referred to herein are found at 17 C.F.R. Ch. 1 (1994).