CFTC Staff Issues Major No-Action Relief for Private Fund Managers Pending QEP Exemption Reinstatement

The CFTC's Market Participants Division (Division) has issued a significant no-action letter granting interim relief from CPO and CTA registration for certain private fund managers that operate commodity pools offered solely to Qualified Eligible Persons (QEPs).

Key Takeaways:

• The relief is aimed at SEC-registered investment advisers managing private funds sold in non-public offerings exclusively to QEPs.

• Eligible managers may forego or withdraw from CPO and CTA registration while the CFTC considers whether to formally reinstate the former QEP exemption (rescinded in 2012).

• The Division acknowledged that CFTC registration for these managers often results in duplicative and overlapping regulation with the SEC, with limited incremental investor-protection benefits for sophisticated investors.

• Managers relying on the no-action position must meet defined conditions (including Form PF filing and QEP-only participation).

• Importantly, managers are not required to offer redemption rights to existing investors solely due to deregistration under this relief, avoiding disruption to negotiated private-fund liquidity terms.

• The relief applies on an interim basis only, pending CFTC rulemaking or a decision not to reinstate the QEP exemption.

It is expected that this action is a precursor to a CFTC regulation change that will make the relief offered in the no-action letter permanent.

For more information regarding the above please see the alert here.

If you have any further questions, please do not hesitate to reach out.

The above should NOT be construed as legal opinion or as a substitute for legal counsel.

This publication is for informational purposes only. It is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

For further information about this alert, please contact Mark Ruddy in Washington, DC via phone at 202-797-0762 or email at MRuddy@ruddylaw.com.

CTAEXPO welcomes the submission of new or reprinted educational material.  This material was provided and prepared by Mark Ruddy and is published to provide educational information and background to financial industry professionals and sophisticated investors. CTAEXPO does not endorse or recommend the author’s services.