CFTC Staff Letter 98-04: Confirmation that Service Provider 'S' is Not a CPO and Exemption for Recordkeeping Location for CPOs 'T' and 'B'

98-04
CFTC Letter No. 98-04
February 21, 1997
Division of Trading & Markets
Re: Section 4m(1) -- Request for confirmation that "S" would not be a commodity pool operator ("CPO") as a result of providing certain services to registered CPOs. Rule 4.23(a) -- Request to permit "T" and "B" to maintain certain required books and records concerning pools they operate at a location other than their main business office. Dear :
This is in response to your letter dated December 13, 1996 to the Division of Trading and Markets (the "Division") of the Commodity Futures Trading Commission (the "Commission"), as supplemented by the prior letter of "A" of your firm on behalf of "S" dated November 11, 1996, by the December 24, 1996 facsimile transmission of "C" and "B", and by telephone conversations with Division staff. By your correspondence, you request on behalf of "T", "B" and "S": (1) confirmation that "S" would not be deemed to be a commodity pool operator ("CPO") as a result of providing certain services to "T" and "B" in connection with certain commodity pools they operate (the "Pools");1 and (2) exemptive relief from Rule 4.23(a)2 to permit the CPOs to keep certain books and records of the Pools at "S's" office. Based upon the representations made in your correspondence, we understand the relevant facts to be as follows. "T", a registered commodity trading advisor ("CTA"), became registered as a CPO effective December 12, 1996. "T" intends to operate and market two new commodity pools, "U" and "V". Additionally, as of December 31, 1996, "T" became a co-general partner and co-CPO with "B" of an existing pool, "W". "S" is registered as a CPO and as a CTA, and it operates and provides commodity interest trading advice to several pools. An affiliate of "S", "X", is engaged in data processing and technological support for the financial services industry.3 "T", "B" and "S" intend to enter into a contract pursuant to which "S" will perform certain of the recordkeeping functions that "T" and "B" would otherwise be obligated to perform with respect to the Pools, as well as a range of other administrative services, as described below. Rather than develop internally the capability to perform these functions, "T" prefers to employ a service provider "S" already equipped to perform them. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/98letters/tm98-04.htm (1 of 5) [5/6/2010 7:30:26 PM]