CFTC Staff Letter 97-03: Relief from CPO Registration and CTA Disclosure Requirements for Canadian Entities

97-03
CFTC Letter No. 97-03
January 15, 1997
Division of Trading & Markets
Re: Request for Relief from Registration as a CPO under Section 4m(1) Request for Relief from Rule 4.31 CTA Disclosure Document Requirement Dear :
This is in response to your letter dated December 13, 1996 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by telephone conversations with Division staff, by which you requested on behalf of "X" that the Division grant "X" relief from registration as a commodity pool operator ("CPO") under Section 4m(1) of the Commodity Exchange Act ("Act").1 In addition, you request on behalf of "Y" that the Division grant relief from the Disclosure Document requirements of Rule 4.312 in connection with "Y" providing commodity interest trading advice to an offshore client. Based upon the representations made in your correspondence, we understand the relevant facts to be as follows. "X" is a Canadian corporation registered as an investment adviser with the Ontario Securities Commission. "Y" is registered with the Commission as a commodity trading advisor ("CTA") and as an investment adviser with the Securities and Exchange Commission. "Y" and "X" are both wholly-owned, indirect subsidiaries of "Z". "X" operates "Fund", a non-United States mutual fund. The Fund is comprised of a series of Canadian-based no load mutual funds.3 Shares in the Fund will be offered and distributed solely in Canada and solely to Canadian citizens and/or residents exclusively by means of prospectus. Shares in the Fund may not be sold to any United States person.4 The Fund invests primarily in government securities issued by the Government of Canada. The Fund anticipates depositing up to twenty percent of its assets as margin and option premiums for commodity futures and options on futures positions in the S&P 500 Index contract traded on the Chicago Mercantile Exchange. "X" intends to engage "Y" as the CTA for the Fund. "X" engages in no other business which involves the use of commodity futures or options on futures. None of the directors of the Fund are subject to statutory disqualification under Section 8a (2) or 8a(3) of the Act.5 Based upon the foregoing, and consistent with prior practice, the Division will not recommend that the Commission take any enforcement action against "X" based solely upon its failure to file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-03.htm (1 of 3) [5/6/2010 7:35:01 PM]