CFTC Staff Issues Self-Executing CPO Delegation Relief

October 21, 2014

The staff of the Commodity Futures Trading Commission (CFTC Staff) on October 15, 2014 simplified the process for a natural person or entity that the CFTC considers to be a commodity pool operator (CPO) to delegate its CPO functions to a registered CPO and avoid duplicative and burdensome registration and regulation (Current Process). In May 2014 (Prior Process), the CFTC Staff made available a “streamlined” approach to obtaining no-action relief where a registered CPO (Designated CPO) is delegated CPO functions from a director, trustee, general partner, manager, or similar person (Delegating CPO) of a commodity pool, depending on the form of the fund. Where Delegating CPOs and Designated CPOs met the criteria outlined in the Prior Process (Prior Criteria), they could have used a brief form letter to affirmatively request relief for each applicable commodity pool rather than submitting a formal, individualized request for relief. However, many registered CPOs, who likely had entered into delegation arrangements, found that they failed to satisfy the Prior Criteria in full, and still needed to request and obtain individualized relief. In addition, the CFTC Staff found that it faced “administrative burdens” with responding to the surprising large number of requests that it had received for relief under the streamlined Prior Process since that approach required an affirmative response granting the relief from the CFTC Staff.

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