CFTC Proposes Repeal of Certain Commodity Pool Operator and Commodity Trading Advisor Exemptions


Exemptions Are Commonly Relied Upon By Investment Advisers to Hedge Funds and Other Private Funds Elimination of Exemptions

On January 26, 2011, the U.S. Commodity Futures Trading Commission (“CFTC”) proposed certain amendments to current CFTC rules, including the elimination of two widely used exemptions from commodity pool operator (“CPO”) registration. If adopted, the proposed amendments would have a significant impact on advisers to funds currently operated as “exempt commodity pools,” including many hedge funds.

The CFTC proposal seeks to eliminate Rule 4.13(a)(3) which currently exempts CPOs from registration if (i) the pool is engaged in a de minimus amount of commodity trading (no more than 5% of the liquidation value of the pool’s portfolio is used to establish commodity interest trading positions or the aggregate net notional value of such positions does not exceed 100% of the liquidation value of the pool’s portfolio), and (ii) the pool’s investors meet certain minimum qualification requirements. The proposed amendments also seek to eliminate Rule 4.13(a)(4), which exempts from registration CPOs where the only investors are (i) natural persons that are “qualified eligible persons” as defined under CFTC rules (these are generally natural persons that meet the qualified purchaser standard) and (ii) entities that are “qualified eligible persons” or accredited investors.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP | Attorney Advertising

Written by:


Foley Hoag LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.