CFTC Grants CPO/CTA No-Action Relief for FX Hedging Transactions

The CFTC Market Participants Division granted no-action relief to a company that acquires biopharmaceutical royalty interests and enters into foreign exchange ("FX") derivatives for the purpose of hedging FX risk.

The Division granted the company no-action relief from CPO/CTA registration subject to a number of conditions designed to ensure that the company used FX derivatives solely to hedge FX risk, and not for speculative purposes. The Division noted that the no-action relief expands upon relief previously granted to the company in connection with entering into interest rate swaps for the purposes of hedging its interest rate risk on floating rate debt used to finance the company's operations.