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Alternative Market Briefing

CFTC releases critical guidance for commodity pool operators

Tuesday, May 20, 2014

Bailey McCann, Opalesque New York:

The Commodities Futures Trading Commission (CFTC) is out with new important guidance for commodity pool operators (CPOs). This guidance comes from numerous requests for no-action relief on failing to register as a commodity pool operator if, another person would serve as the registered CPO of the commodity pool at issue in lieu of the requesting CPO. The regulator said it has created a new streamlined framework for dealing with these requests given their volume in an effort to make the process more efficient for firms that meet the criteria.

The regulator has also modified its view of requiring independent directors of a private fund, as a condition of delegation, to agree to remain jointly and severally liable for any violations of the Commodity Exchange Act. Lawyers for Schulte Roth and Zabel issued a client alert today detailing some of the criteria. The lawyers were quick to point out that while the process for seeking no-action relief is now streamlined, in many cases seeking relief still requires an individual, or case-by-case decision.

"While recognizing the need for more efficiency and certainty in this process, however, in the May guidance, the CFTC staff held to the position that CPO delegation requires individual no-action relief. The CFTC staff did, however, establish a more streamlined process for obtaini......................

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