CFTC Issues No-Action Relief for Family Offices from CTA Registration (CFTC Letter 14-143)
Commentary by Steven Lofchie
The CFTC Division of Swap Dealer and Intermediary Oversight (the "Division") issued a no-action letter providing relief from CTA registration for family offices in connection with the advisory services they offer to a "family client," as defined in Advisers Act Rule 202(a)(11)(G)-1(d)(4).
To receive relief, a family office must submit a claim to the Division and remain in compliance with the exclusion for family offices from the definition of "investment adviser," as adopted by the SEC in 2011. The relief granted to family offices from CTA registration is similar to that which was granted to them from CPO registration in November 2012 under CFTC Letter 12-37.
See: CFTC Letter 14-143.
See also: CFTC Letter 12-37.
Commentary
This CFTC no-action letter provides long-awaited relief from CTA registration for family offices by addressing the regulatory gap left by CFTC Letter 12-37, which provided them with CPO – but not CTA – registration relief. The latest letter rounds out the "exempt" status of family offices, which are excluded from investment adviser registration with the SEC pursuant to Rule 202(a)(11)(G)-1 under the Advisers Act, and which may claim CPO and CTA registration relief pursuant to CFTC No-Action Letters 12-37 and 14-143, respectively.
Firms should be mindful of certain compliance issues relating to the CTA registration relief. Most importantly, firms should check whether they fall within the scope of the relief by confirming that they are "family offices" that limit advice to "family clients," as defined in Rule 202(a)(11)(G)-1 under the Advisers Act. For example, firms may not qualify for relief if they provide advice to investment vehicles owned both by family and nonfamily members. Second, firms should maintain copies of their CFTC family office filings (and related supporting documentation) in order to respond to Bylaw 1101 inquiries from futures commission merchants (and other NFA member firms) concerning their CFTC registration status, and to the NFA in the context of periodic audits.