RegAlert1996-05-30 | CFTC Staff Letter 96-46Added · Updated
CFTC Staff Letter 96-46: No-Action Relief from CPO and CTA Registration for Fund of Funds
The Division of Trading and Markets will not recommend enforcement action against X for failing to register as a commodity pool operator or against Y for failing to register as a commodity trading advisor, provided specific conditions are met. The relief applies to a limited partnership fund with approximately four million dollars in assets, where investors are qualified eligible participants. The fund must limit its aggregate investment in investee funds trading commodity interests to no more than ten percent of net assets, with each investee fund further limited to ten percent of its own net assets for commodity futures margins or premiums. This structure results in a maximum exposure of one percent of the fund's net assets to commodity interest risks, while maintaining required disclosures, reporting, and record-keeping obligations.
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U.S. COMMODITY FUTURES TRADING COMMISSION DIVISION OF 1RADING & MARKETS Three Lafayette Centre 1155 21st Street, NW, Washington, DC 20581 Telephone: (202) 418-5430 Facsimile: (202) 418-5536 May 30, 1996 RE: Request for Relief From Registration As A CPO and Request for Relief From Registration As A CTA Dear This is in response to your letter dated March 1, 1996, as supplemented by your facsimile message dated April 26, 1996 and telephone conversations with the staff of the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), in which you requested that the Division not recommend that the Commission take any enforcement action against: (1) "X" for failure to register as a commodity pool operator ("CPO") in connection with "X's" operation of the "Fund", and (2) "Y" for failure to register as a commodity trading advisor ("CTA"), in connection with "Y's" providing commodity trading advisory services to the Fund, pursuant to
Section jm(1) of the Commodity Exchange Act, as amended (the
"Act") .1.
Based upon the representations made in your correspondence, we understand the relevant facts to be as follows. The Fund is a limited partnership organized under the laws of the state of "8". Each of the four investors in the Fund is a "qualified eligible participant" ("QEP"), as defined in Rule 4 .. 7(a) (1) (ii). The Fund has approximately four million dollars in assets. Its investment objective is to generate profits from securities trading. Its investment strategy generally is to allocate its assets to a limited number of other investment partnerships -- that is, to act as an investor fund in various investee funds ("Investee Funds"). You characterize the Investee Funds as "securities partnerships." None of the Investee Funds is affiliated with the Fund, "X 11 or 11 Y11 • Your request for a no-action position with 1./ 7 u.s.c. seq. (1994). 17 C.F.R. Ch.
1995) .
§ 6m(1) (1994). The Act is found at 7 U.S.C. §§ 1 et Commission rules referred to hereinafter are found at I (1995), as amended by 60 Fed. Reg. 38146 (July 25,
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CFTC published 6 documents in the last 30 days. We email you each new one the day it's published.