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December 8, 2003
CPO Exemption Filing Requirement
On August 8, 2003, the Commodity Futures Trading Commission ("CFTC") adopted final rules that provide additional exemptions from registration as a Commodity Pool Operator ("CPO"). The full text of the rules can be viewed at http://www.cftc.gov/files/foia/fedreg03/foi030808a.pdf.
Two of the new rules exempt a CPO from registration if all fund participants meet a certain sophistication level set forth by the rules. Specifically, 4.13(a)(3) exempts a CPO from registration if all fund participants are accredited investors, qualified eligible persons as defined under CFTC Regulation 4.7(a)(2)(viii)(A), or knowledgeable employees and the fund meets one of two de minimus trading tests. Rule 4.13(a)(4) exempts a CPO from registration if all natural person participants are qualified eligible persons as defined in CFTC Regulation 4.7(a)(2) and the remaining participants are accredited investors or qualified eligible persons as defined in CFTC Regulation 4.7(a)(2) or 4.7(a)(3).
Under the new rules, a CPO may remain registered even though it operates pools described in CFTC Regulation 4.13(a)(3) or 4.13(a)(4). Specifically, a CPO may operate one or more commodity pools described in CFTC Regulation 4.13(a)(3) or 4.13(a)(4) while also operating one or more commodity pools that require the CPO to be registered. In such cases, the CPO must provide a written notice to the prospective pool participants in each exempt pool. This notice should clearly identify the pool the CPO will operate under the claimed relief. In addition, this notice must state that the CPO will operate the pool as if it was exempt from registration and describe the criteria pursuant to which it will operate the pool.
In order for NFA to properly update our records to reflect the status of each pool operated by a registered CPO, the CPO should also file a copy of this notice with NFA. The notice can be e-mailed to firstname.lastname@example.org, faxed to (312) 220-9003, or mailed to the Director of Compliance, National Futures Association, 200 W. Madison Street, Suite 1500, Chicago, Illinois 60606.