CFTC DSIO Letter Regarding Bona Fide Hedging Exemption for Registered Investment Companies (with Lofchie Comment)

The CFTC Division of Swap Dealer and Intermediary Oversight (DSIO) issued the attached letter that clarifies, and significantly broadens, in light of the recent court decision regarding the CFTC’s position limits rule, the scope of the bona fide hedging exemption from the trading thresholds as applied to registered investment companies pursuant to Rule 4.5.

Lofchie Comment: Although not remarked on in the letter, the CFTC's expansion of its registration requirement as to registered investment companies is also the subject of challenge in the courts. See news item.

See: CFTC Letter 12-19 Commission Regulations 4.5 and 1.3(z); Interpretation. See also: CFTC Press Release.