CFTC Issues Final Rules Affecting Exemptive Relief For Commodity Pool Operators And Commodity Trading Advisors

Overview: The article talks about the Commodity Futures Trading Commission (CFTC) issued final rule amendments (final rules) that expanded certain registration exemptions for operators (CPOs) and advisors (CTAs) of pooled investment vehicles which are not offered to the retail public. Exemptions claimed by such pool operators and advisors would also extend to their associated persons. There are two new CPO exemptions. One of them has a high investor suitability threshold and requires no limitations on the pool’s commodity trading activities. The other has a lower investor suitability threshold but requires some trading restrictions. Under CFTC Rule 4.14(a)(8), an advisor to a pool whose operator meets any of the CPO registration exemptions noted above is eligible to claim an exemption from CTA registration, provided that (i) the advisor is registered as an investment adviser under the Investment Advisers Act of 1940 or under the securities laws of any state (or is exempt or excluded from the federal definition of investment adviser), (ii) the advisor’s trading advice is directed solely to, and for the sole use of, pools operated by CPOs who have claimed the above exemptions and (iii) the advisor’s trading advice is solely incidental to its business of providing securities advice to each such pool. In addition, an advisor claiming this exemption must not otherwise hold itself out as a CTA. Other criteria may apply to pools that are organized and operated outside the United States.

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Format: PDF | Size: 310KB | Date: Aug 2003 | Pages: 4