On December 19, 2025, the Market Participants Division (MPD) of the CFTC published CFTC Letter No. 25-50, issuing interim relief in response to a request from the Managed Funds Association. Pursuant to the letter, MPD will take no action if a private fund manager that is a registered investment adviser (1) fails to register as a commodity pool operator (CPO) or commodity trading advisor (CTA) or (2) withdraws from CPO or CTA registration without offering investors an opportunity to redeem their interests. In its letter, MPD stated that the effect of the no-action letter would be to restore former CFTC regulation 4.13(a)(4) — the QEP (Qualified Eligible Person) Exemption — on an interim basis. In 2012, the CFTC rescinded the QEP Exemption. Prior to 2012, the QEP Exemption provided an exemption from CPO registration to managers of private funds that may be “commodity pools” consisting solely of investors that are QEPs. The CFTC’s no-action letter provides interim relief to registered investment advisers managing commodity pools until the CFTC can promulgate new rules to reinstate the QEP Exemption.
Background
A private fund may be a commodity pool, even though it does not trade commodity futures, if it engages in one or more swaps. A fund that enters into at least one interest rate swap, for example, is a commodity pool. The manager of a commodity pool must register as a CPO, and the advisor1 must register as a CTA, unless an exemption is available. Currently, fund managers seeking an exemption from CPO registration use the de minimis exemption in CFTC regulation 4.13(a)(3), which imposes a limitation on derivatives usage by the commodity pool managed by the CPO claiming the exemption. The exemption also requires a notice filing with the National Futures Association prior to the first closing of the fund and annually for the life of the commodity pool, even if the only derivatives activity took place during the first year of the pool. A manager that advises a commodity pool exempt from CPO registration is exempt from registration as a CTA pursuant to CFTC regulation 4.14(a)(4), and a CTA that solely advises a CPO exempt under the de minimis exemption is exempt from CTA registration pursuant to CFTC regulation 4.14(a)(8)(i).
Prior to 2012, managers of commodity pools could use the QEP Exemption from CPO registration if the pool was a private investment fund and the only investors were QEPs, as defined in CFTC regulation 4.7. QEPs generally include institutional investors, family offices, high-net-worth individuals, and certain other knowledgeable investors. When the QEP Exemption was rescinded in 2012, CPOs that could not meet the limitations on derivatives activity required by the de minimis exemption were required to register as CPOs, and their associated advisers were required to register as CTAs.
Conditions of the No-Action Letter
The no-action position is available to pool managers on the following conditions:
- The manager is required to register as a CPO or is relying on an existing exemption.
- The manager is registered with the SEC as an investment adviser.
- The interests in the pool are exempt from registration under the Securities Act of 1933 and sold without marketing to the public in the US, except as permitted by Rule 506(c) of Regulation D.
- The manager reasonably believes that each pool participant is a QEP.
- The manager files a Form PF with the SEC with respect to the pool or pools covered by the no-action position, and the CFTC receives a copy.
- The manager complies with the requirements of regulation 4.13(b) — notice filing — and 4.13(c) — record keeping and disclosure of certain information to participants — except that the required notice of reliance on the no-action position is filed via email to mpdnoaction@cftc.gov.
No Redemption Requirement
Under CFTC regulation 4.13(e)(2)(iii), a manager that is withdrawing from registration as a CPO to claim an exemption must offer all participants an automatic right to redeem their interests in the pool. The no-action letter permits CPOs to withdraw from registration to claim the no-action position without having to offer automatic redemption.
- [1] The term “commodity trading advisor” as used by the CFTC has the -or ending, whereas the term “investment adviser” as used by the SEC has the -er ending. In this Alert, we have used the appropriate spelling in context. ↩
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