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To provide an overview of a new, streamlined process from the Division of Swap Dealer and Intermediary Oversight (DSIO) of the Commodity Futures Trading Commission (CFTC) by which a commodity pool operator (CPO) may request expedited no-action relief for failure to register under Section 4m(1) of the Commodity Exchange Act if such CPO has designated another, registered CPO to serve as the CPO of the commodity pool.

Explains the background to the CPO registration no-action relief related to CPO delegation and the streamlined process for requesting no-action relief, including the procedure for requesting relief and the applicable criteria that must be satisfied to utilize the streamlined process.

By providing an alternative, streamlined process for requesting no-action relief from CPO registration in the context of delegation arrangements in certain circumstances, the CFTC staff is attempting to facilitate obtaining such relief, particularly since relief may be sought on behalf of multiple commodity pools by means of a single request. However, the criteria that must be fulfilled in order to utilize the streamlined process are not necessarily applicable to all CPOs and in all scenarios. Thus, certain CPOs may need to request no-action relief outside of the new, streamlined process or consider alternative fund structures.

Practical guidance from experienced asset management lawyers.

To explain CFTC No-Action Letter 14-126, issued on October 15, 2014 by the Commodity Futures Trading Commission Division of Swap Dealer and Intermediary Oversight, which sets forth a number of conditions with which a commodity pool operator (“CPO”) that delegates its CPO responsibilities (“Delegating CPO”) to a registered CPO (“Designated CPO”) must comply in order to take advantage of no-action relief from the requirement to register as a CPO.

Explains the modified conditions provided by Letter 14-126, including clarification of the permissible activities in which a Delegating CPO seeking to take advantage of registration no-action relief may engage regarding investment management, solicitation, and management of pool property; lists other criteria carried over from Letter 14-69 of May 12, 2014; provides analysis and discusses limitations of the relief provided by the CFTC No-Action letter.

The letter makes more liberal several of the conditions set forth in CFTC Letter 14-69 of May 12, 2014, with which many Delegating CPOs could not comply.

Practical guidance from experienced financial services lawyers.