CFTC Staff Letter 95-28: Relief from Introducing Broker Registration for CPO Owned by IB Associated Person

DIVISION OF
TRADING AND MARKETS
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COMMODITY FUTURES TR_ADING COM~'S:~r~~f.)), , \OH 2033 K Street, NW, Washmgton, DC 20581 \F.~-JEC;- ~'']) (202) 254 -8955 1' ,_ ' nc "Qft) pi.}P,L~C r,cv (202) 254-8010 Facsimile ~ 11'\ Hlt \U ~ts l\1' JJ RpR. 3 March 13, 1995 Re: Relief from Introducing Broker Registration -- Section 4d of the Act Dear This is in response to your letter dated January 23, 1995 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission") , as supplemented by telephone conversations with Division staff. In your letter, you requested that the Division grant relief to "V" and "W", an "A" corporation (the "Company"), under Section 4d 9f the Commodity Exchange Act (the "Act"), 7 U.S.C. § 6d (1988) .1.1 The Company is currently seeking registration as a commodity pool operator ("CPO"), and in connection therewith, you request that the Company not be required to register also as an introducing broker ( "IB") if commissions that "V" earns in his capacity as an associated person ("AP") of a registered IB, "Y", an "A" corporation ("Y"), are paid directly to the Company, an entity wholly owned and controlled by "V", instead of to "V", individually, as an employeejAP of "Y". Based upon the representations made in your letter, as supplemented by telephone conversations with Division staff, we understand the relevant facts to be as follows. A commodity pool is being established as "Z", an "A" limited partnership (the "Limited Partnership Pool") . The Company is the general partner of the Limited Partnership Pool, and has submitted an application for registration as a CPO. "V" is the sole shareholder, director and officer of the Company. "V" is also currently employed as an AP of "Y". A vice president and minority shareholder of "Y", "B", will be the commodity trading advisor ("CTA") of the Limited Partnership Pool. When the Limited Partnership Pool begins trading, the trades will 1./ The Act is found at 7 U.S.C. §§ 1 et seq. (1988 & Supp. V 1993). Commission rules referred to herein are found at 17 C.F.R. Ch. I ( 19 9 4) .