Advisories

CFTC Adopts Final Rules Providing Expanded Registration Relief To CPOs And CTAs

August 2003

As a follow-up to the Commodity Futures Trading Commission’s ("CFTC’s") recently proposed amendments to its rules related to the creation of several new registration exemptions available to Commodity Pool Operators ("CPOs") and Commodity Trading Advisors ("CTAs") and the expansion of the regulatory relief available to entities excluded from the definition of a CPO, the CFTC announced on August 4, 2003, the adoption of Final Rules on these subjects.

The Final Rules amend CFTC Rules 4.13, 4.14 and 4.5 to add and clarify a number of exclusions from the definition of CPO and CTA, as well as exemptions from the CPO and CTA registration requirements. In addition, the Final Rules also amend CFTC Rules 4.21, 4.22 and 4.31 to provide increased regulatory relief to facilitate communications by CPOs and CTAs. All of the New Rules discussed herein are effective immediately.

The New Rules adopted by the CFTC represent a major liberalization of the CPO and CTA registration requirements and significantly reduce the barriers to entry of advisors and fund managers who wish to transact business in commodity interests on behalf of their clients. They also present a potential opportunity for current registrants to free themselves of the costs and burdens of many regulatory obligations.