On December 7, 2012, the Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) issued a no-action letter to mortgage real estate investment trusts (mREITs). The letter states that DSIO will not recommend that the CFTC take enforcement action against the operators of mREITs for failure to register as commodity pool operators ("CPOs") under the Commodity Exchange Act and the CFTC's regulations, provided that the mREIT satisfies certain criteria described below.

The CFTC has stated that it views mREITs (because of their use of swaps) as falling within the statutory definition of commodity pools and the operators thereof as CPOs. Absent relief, such CPOs would be required to register with the CFTC. However, pursuant to the no-action letter, mREIT operators will not be subject to enforcement action if the mREITs they operate meet the following criteria....

Please see full alert below for more information.