CFTC Issues No-Action Relief to Nonprofit from Registering as CPO (CFTC Letter 14-28)

The CFTC Division of Swap Dealer and Intermediary Oversight ("DSIO") issued no-action relief regarding the operation of certain collective trading vehicles by either of two corporations, both of which are controlled by a single nonprofit corporation, exempting either corporation from registering as a CPO with respect to the described structure pursuant to CEA Section 4m(1) ("Use of Mails or Other Means or Instrumentalities of Interstate Commerce by Commodity Trading Advisors and Commodity Pool Operators; Relation to Other Law").

In the letter, the CFTC reasoned that the collective trading vehicles would commingle assets of church plans (within the definition of CFTC Rule 4.5 ("Exclusion for Certain Otherwise Regulated Persons from the Definition of the Term 'Commodity Pool Operator'")) associated with the denomination's churches, together with endowments and other assets of certain nonprofit corporations. Although the CFTC recognized that the collective trading vehicles would be pools, the DSIO believed that requiring CPO registration would serve no substantial regulatory purpose because persons who would be subject to background checks and proficiency examinations would already have been vetted and hired by the nonprofit corporation. Furthermore, the CFTC stated, it believes that a Disclosure Document would serve no purpose, as it essentially would be delivered between controlled companies.

See: CFTC Letter 14-28.