Key Takeaways

  • On August 18, 2026, the CFTC proposed amendments1 to its commodity pool operator (CPO) and commodity trading advisor (CTA) registration exemptions, including the restoration of an exemption for CPOs operating commodity pools sold only to certain sophisticated investors without a de minimis limit on commodity interest trading.
  • If adopted, the exemption set forth in proposed CFTC Regulation 4.13(a)(4) would be the most significant CFTC regulatory development for the asset management industry since 2012, when the CFTC rescinded the CPO registration exemption then available under the prior version of Regulation 4.13(a)(4) (Prior CPO Exemption).
  • The conditions to the proposed exemption include (1) registration with the SEC as an investment adviser, (2) private offering and sale of pool interests, with general solicitation pursuant to the JOBS Act amendments to Regulation D permitted, (3) reasonable belief that each investor meets certain qualification requirements at the time of investment or conversion to reliance on the exemption, and (4) filing Form PF with respect to the relying pool, if applicable.
  • The Proposal would not turn the clock back to 2012. New CFTC Regulation 4.13(a)(4) would only be available to investment advisers registered as such with the SEC, and would be subject to several other conditions similar to those in CFTC Letter No. 25-50.2
  • The Proposal does not address certain practical challenges introduced by Letter No. 25-50.3 In addition, under the Proposal, a registered CPO seeking to rely on the new exemption would be required to provide existing participants a right to redeem in certain circumstances.
  • The Proposal also includes a corresponding amendment to CFTC Regulation 4.14(a)(8) that would exempt CTAs to funds whose CPOs rely on Regulation 4.13(a)(4), and an inflation-adjusted increase to the gross capital contribution limit for CPOs that rely on the “small pool” registration exemption.

Comments on the Proposal are due by October 5, 2026.

Background

In 2012, the CFTC rescinded the Prior CPO Exemption, which was generally available to managers of commodity pools where the investors were limited to certain sophisticated, often institutional, investors deemed to be “qualified eligible persons” (QEPs) in an offering exempt from registration under the Securities Act of 1933 (Securities Act).4 The Prior CPO Exemption did not contain any limit on the commodity interest trading in such a pool or any restriction on marketing the pool as a means to obtain commodity interest market exposure. Following the rescission of the Prior CPO Exemption, many CPOs within the United States and certain CPOs outside of the United States accepting U.S. person investors in pools that had relied on the Prior CPO Exemption were forced to: (1) register with the CFTC as CPOs, become members of the National Futures Association (NFA) and become subject to certain CFTC disclosure, reporting, recordkeeping, advertising and compliance requirements with respect to such pools; and/or (2) qualify for and claim another CPO registration exemption, such as CFTC Regulation 4.13(a)(3), which limits commodity interest trading to de minimis amounts and requires ongoing monitoring of trading levels.

On December 19, 2025, the Staff of the CFTC Market Participants Division issued Letter No. 25-50 to the Managed Funds Association as an “interim measure to reduce the burdens on certain private fund managers to institutional and high net worth individuals” while the CFTC considered whether to complete formal rulemaking.

Proposed CFTC Regulation 4.13(a)(4)

The Proposal would largely, but not precisely, codify in new CFTC Regulation 4.13(a)(4) the terms of Letter No. 25-50. Under the Proposal, a CPO would be able to qualify for the registration exemption for the operation of a pool if:

  1. Interests in the pool are exempt from registration under the Securities Act, and such interests are offered and sold without marketing to the public in the United States, unless such interests are offered via general solicitation pursuant to Regulation 506(c) under the Securities Act;
  2. The CPO is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
  3. The CPO reasonably believes, at the time of investment (or, in the case of an existing pool, at the time of conversion to a pool meeting the criteria of paragraph (a)(4)), that:
    1. Each natural person participant (including such person’s self-directed employee benefit plan, if any) is a natural person listed in paragraph (i) of the definition of QEP in CFTC Regulation 4.7(a)(6);5 and
    2. Each non-natural person participant is a QEP, as that term is defined in CFTC Regulation 4.7(a)(6), or an “accredited investor,” as that term is defined in Regulation 230.501(a)(1)-(3), (a)(7), or (a)(8) under the Securities Act;6 and
  4. The CPO files Form PF, if it is required to do so by Form PF and/or related securities regulations.7

The CPO would be required to disclose to prospective investors reliance on the exemption under new CFTC Regulation 4.13(a)(4). In addition, the CPO would be required to claim the exemption through an electronic notice filing with the NFA, and that notice would be subject to annual reaffirmation.

A CPO seeking to change from operating an existing pool in its registered CPO capacity to operation under new CFTC Regulation 4.13(a)(4) would be required to provide existing participants with a right to redeem. Disclosure, notice filing and reaffirmation with the NFA and the provision of the right to redeem are not conditions of Letter No. 25-50. The CFTC acknowledges that Letter No. 25-50 does not require the CPO to provide the redemption right but that new CFTC Regulation 4.13(a)(4) would require it.8 Since CPOs who have already proceeded to claim the relief under Letter No. 25-50 would not be required to provide a redemption right to operate under new CFTC Regulation 4.13(a)(4), but those CPOs planning to move from operating pools in their registered CPO capacity directly to operation under new CFTC Regulation 4.13(a)(4) would, the CFTC seeks comment on whether the CFTC should delay the effective date of the redemption right for some period of time after the rest of the new CFTC Regulation 4.13(a)(4) becomes effective.

The CFTC intends for new CFTC Regulation 4.13(a)(4) to supersede Letter No. 25-50, so those CPOs that have proceeded to avail themselves of the no-action relief on a pool-by-pool basis or have deregistered entirely as a CPO in reliance on the relief will need to take applicable steps to operate under new CFTC Regulation 4.13(a)(4) (e.g., providing notice to prospective investors and filing the electronic notice with the NFA).

Importantly, the Proposal is not a reinstatement of CFTC Regulation 4.13(a)(4) as it was in effect prior to 2012. If the exemption is adopted as proposed, CPOs that are not registered as investment advisers with the SEC will not qualify for the exemption, including exempt reporting advisers or general partners not claiming umbrella registration with an SEC-registered investment adviser. However, general partners not claiming umbrella registration with an SEC-registered investment adviser may be able to rely on CFTC No-Action Letter No. 26-06 to delegate CPO duties to an SEC-registered investment adviser.9

The Proposal upholds the CFTC’s traditional pool-by-pool approach to CPO exemptions, allowing fund sponsors and other CPOs to operate different pools in reliance on different exemptions, or to operate one or more pools in a registered capacity, while relying on exemptions with respect to one or more other pools.

Proposed Amendment to CFTC Regulation 4.14(a)(8)

The Proposal would also include an amendment to CFTC Regulation 4.14(a)(8)(i)(D) to restore the cross-reference to CFTC Regulation 4.13(a)(4), such that the CTA exemption would be available to investment advisers, including registered investment advisers, whose commodity interest trading advice is directed, among others, solely to a CPO that has claimed an exemption under new CFTC Regulation 4.13(a)(4).

As proposed, the amendment to CFTC Regulation 4.14 does not acknowledge the client’s right to terminate its advisory agreement as set forth in the second proviso in CFTC Regulation 4.14(c)(2). If CTAs want to transition from advising clients in their registered CTA capacity to operating under this restored CTA exemption without being required to provide clients with the right to terminate, the CFTC will need to provide a similar dispensation as it is contemplating for CPOs for the right to redeem. Affected CTAs should bring this to the CFTC’s attention in comments on the Proposal.

Proposed Amendment to CFTC Regulation 4.13(a)(2)

Finally, the Proposal would amend CFTC Regulation 4.13(a)(2), which provides a CPO registration exemption to CPOs of small pools. Currently the maximum total gross capital contributions to all pools a CPO operates or intends to operate under this exemption is $400,000. The CFTC is proposing to raise this limit to $800,000 in recognition of the effect of inflation since the current limit was set in 2003.

Request for Industry Comments

The CFTC has requested comments on all aspects of the Proposal, and comments are due by October 5, 2026. CPOs, CTAs and other market participants that anticipate being affected by the Proposal should plan to comment.

 

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Footnotes

  1. Commodity Pool Operators and Commodity Trading Advisors: Reduction of Duplicative Regulation Through Intermediary Registration Exemptions; Expansion of the Exemption for Small Commodity Pools, 91 Fed. Reg. 54264 (Aug. 21, 2026) (Proposal).
  2. CFTC No-Action Letter No. 25-50 (Dec. 19, 2025) (Letter No. 25-50).
  3. For a detailed discussion of Letter No. 25-50, see CFTC Staff Extends Relief to Certain RIAs Operating Private Commodity Pools, Dechert OnPoint (Dec. 23, 2025), available here.
  4. At a high level, the CFTC rescinded the Prior CPO Exemption under the theory that the sources of risk associated with private funds were also associated with commodity pools.
  5. The categories of QEPs under CFTC Regulation 4.7(a)(6) can be reviewed here.
  6. The categories of accredited investor under Regulation 501(a)(1)-(3), (a)(7), or (a)(8) can be reviewed here.
  7. The condition regarding Form PF is also subtly different from the similar condition in Letter No. 25-50 in that Letter No. 25-50 requires that the CPO file a Form PF with the SEC with regard to the pool(s) covered by the no-action relief, which filing is received by the CFTC. This change appears to acknowledge that the SEC and CFTC are currently in the process of amending Form PF which may raise the threshold on which pools need to be filed on Form PF. For further discussion, see SEC and CFTC Propose New Form PF Amendments, Dechert OnPoint (Apr. 22, 2026), available here.
  8. The CFTC stated that “the Commission does not intend to place additional, conflicting requirements upon RIA-CPOs that are currently relying on Letter 25-50 for qualifying pools, many of whom may have consequently deregistered as CPOs,” and that the CFTC “preliminarily intends that . . . such CPOs would generally not be subject to [CFTC Regulation 4.13(e)(2)] for such pools.”
  9. CFTC No-Action Letter No. 26-06 (Feb. 26, 2026).